Shares of Eternal Ltd (formerly known as Zomato) declined 3.17% to Rs 230.01 in early trade on Monday, hitting an intraday low of Rs 227.95, amid concerns of heavy passive outflows worth $840 million. The stock had closed at Rs 237.55 on Friday.
According to a CNBC-TV18 report citing IIFL Capital Services, global index providers FTSE Russell and MSCI are set to reduce Eternal’s weightage in their respective indices due to a sharp cut in the company’s foreign ownership limit (FOL) from 100% to 49.5%.
This reduction has forced a recalibration of the company’s investability weight, as index trackers are mandated to realign their holdings to reflect the updated FOL cap.
FTSE and MSCI to drive large-scale passive outflows
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FTSE Russell is expected to implement the adjustment on May 27, impacting indices such as:
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FTSE All-World Index
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FTSE MPF All-World Index
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FTSE Global Large Cap Index
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FTSE Emerging Index
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FTSE’s rebalancing alone could lead to outflows of around $380 million (Rs 3,235 crore).
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MSCI’s May review could add another $460 million (Rs 3,917 crore) to the overall outflows.
Unlike typical adjustments that gradually reflect investor activity, a direct FOL cut triggers an abrupt recalibration, causing the entire investable portion to be reduced in one go — escalating near-term selling pressure.
Eternal’s stock performance may remain volatile in the short term as global funds rebalance their portfolios based on the updated foreign holding norms.
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