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Eternal is expected to witness outflows of approximately $840 million following a potential reduction in its weightage by global index providers
Eternal Share Price Today
Shares of Eternal Ltd, the parent of food delivery major Zomato, dropped over 3% in early trade on Monday following the prospect of large-scale passive outflows due to a sharp reduction in the stock’s weightage by global index providers FTSE Russell and MSCI.
At 9:38 AM, Eternal was trading 3.17% lower on the NSE, emerging as the biggest loser among Nifty50 constituents.
The pressure comes after the company’s foreign ownership limit (FOL) was slashed from 100% to 49.5%, forcing FTSE and MSCI to significantly reduce Eternal’s investability weight in their indices.
Unlike routine rebalancing, a direct FOL cut typically results in immediate one-time adjustments by index providers, which can trigger accelerated selling from passive funds.
According to IIFL Capital Services, these changes could lead to passive outflows of nearly $840 million (approx. Rs 7,150 crore). FTSE alone may trigger outflows of $380 million (Rs 3,235 crore), while MSCI’s changes could result in an additional $460 million (Rs 3,917 crore).
Eternal currently features in several global indices such as the FTSE All-World Index, FTSE MPF All-World Index, FTSE Global Large Cap Index, FTSE Emerging Index, and the MSCI India Index. FTSE Russell will implement its revised investability weighting—from 82.74% to 49.5%—on May 27, while MSCI’s changes will take effect on May 30. Despite the reduction, Eternal will remain part of these indices, with the total number of shares unchanged at 9,064,966,438, FTSE clarified.
The FOL revision was overwhelmingly approved by Eternal’s shareholders, with 99% voting in favour of the cap. However, this strategic move—likely aimed at managing long-term regulatory or strategic risks—has led to near-term market consequences.
Jefferies has warned of even higher outflows, estimating the total impact could reach $1.3 billion if the stock is completely removed from MSCI’s indices.
The brokerage explained that if the FPI holding exceeds the revised limit, foreign investors must unwind excess shares within five trading days, selling only to domestic investors. Jefferies also noted that Eternal’s conversion to an Indian-owned and controlled company (IOCC) could further reduce or eliminate its index weight.
“Based on MSCI’s foreign ownership room calculation, Eternal could either face immediate exclusion, triggering $1.3 billion in outflows, or a partial reduction in weight, leading to $650 million in outflows during the August 2025 rebalancing,” said Maheshwari from Jefferies.
If the foreign ownership limit is breached before implementation, a definitive exclusion from MSCI is likely.
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