Eternal Share Price Falls 4% Following FTSE and MSCI Weight Reductions

Market Performance: Sharp Dip in Early Trade

Eternal's share price dropped by 4% in early Monday trading, sliding to ₹227.95 per share on the BSE. The decline reflects market reactions to significant passive fund outflows expected after major index providers FTSE Russell and MSCI announced cuts to Eternal's index weightage.

At 9:40 AM, Eternal shares traded lower by around 3.2%, maintaining downward pressure amid growing concerns over the impact of these index changes.

Impact of Foreign Ownership Limit Reduction

Unlike gradual, phased reductions usually seen with index rebalancing, the direct cut in FOL results in an immediate and full reduction in investability weight. This one-time adjustment intensifies near-term selling pressure, as the market must absorb the entire impact simultaneously.

FTSE Russell has announced the effective date for this adjustment as May 27. Eternal is currently included in several major FTSE indices, such as:

• FTSE All-World Index
• FTSE MPF All-World Index
• FTSE Global Large Cap Index
• FTSE Emerging Index

Eternal Share Price Trend: Mixed But Challenging Short-Term Outlook

Eternal's share price has displayed mixed performance in recent months:

• The stock has remained essentially flat over the past three months.
• It has declined 17% year-to-date (YTD).
• Over the last six months, shares are down approximately 18%.

However, long-term returns have been strong, with Eternal shares gaining nearly 25% over the past year and an impressive 280% rise in the last three years.

Summary

• Eternal shares dropped 4% amid expected $840 million passive outflows due to index weight cuts by FTSE and MSCI.
• The foreign ownership limit cut from 100% to 49.5% has intensified selling pressure.
• FTSE's adjustment will be effective on May 27, affecting several global indices.
• Short-term price trends remain weak, with a 17% YTD decline, despite substantial long-term gains.