Shares of Eternal Ltd - the parent entity of food delivery giant Zomato and quick-commerce platform Blinkit, gained nearly 3% in the morning session on Thursday, July 9, following expectations of a favorable adjustment in the upcoming MSCI August review. According to domestic brokerage Motilal Oswal, Eternal could be restored to its full weight in the MSCI global standard index. If the index provider goes ahead with the move, it is likely to trigger substantial passive foreign inflows in the stock, estimated at $520 million.
On Thursday, shares of Eternal Ltd. opened at Rs 287.30 against a previous close of Rs 286.70 and extended gains by upto 3% to hit an intraday high of Rs 300.35 apiece on the NSE. This compares to a rise of 0.75% in the Nifty 50 benchmark.
The optimistic outlook is primarily driven by a recent expansion in the company's foreign ownership room. Analysts at Motilal Oswal highlighted in a recent note that the available foreign institutional investor (FII) headroom for Eternal Ltd. has now expanded and comfortably sits above the crucial 25% threshold. This improved headroom is a key metric that clears the path for the MSCI index to reverse any previous weight reductions tied to foreign ownership limit constraints, as per analysts.
With the August index review on the horizon, market participants are likely to accumulating the stock, say analysts. A full weight restoration in the MSCI benchmark and the resulting $520 million in passive flows would provide a massive liquidity boost, further reinforcing investor confidence in the quick commerce ecosystem conglomerate and new-age consumer-focussed tech stocks.
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