MSCI to drop Swiggy from global indices on September 7

Mumbai: Global index providers MSCI and FTSE said on Wednesday they would make changes to Swiggy's index treatment after the company's foreign ownership limit (FOL) was lowered to 49.5% from 100%.

MSCI will delete Swiggy from global indices, with the change expected to take effect on September 7. The deletion could result in passive outflows of about $330 million, equivalent to nearly 120 million shares, or around five to six days of average daily volume, according to Nuvama Alternative and Quantitative Research. FTSE announced a change in Swiggy's 'investability weight' following the reduction in its foreign ownership limit. The change will be effective from the start of trading on September 7.

Nuvama estimates passive outflows linked to the MSCI and FTSE changes could exceed $350 million in the initial adjustments. Swiggy was included in the 'Red Flag' list maintained by depositories NSDL and CDSL. According to NSDL, a Red Flag is activated when the foreign investment is within 3% or less than 3% of the aggregate NRI or Foreign Portfolio Investor limits or the sectoral cap.


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The foreign investment headroom in the stock has fallen below 3.75%, said Nuvama Alternative's head Abhilash Pagaria. Swiggy shares fell 2.7% to ₹267.50 on Wednesday. Recently, Swiggy decided to cap aggregate foreign ownership at 49.5% to enable it to qualify as an Indian-owned and controlled company (IOCC) under foreign investment rules. Shareholders approved the proposal in August.

Nuvama estimates that the FTSE changes could eventually result in passive outflows of about $110 million. It expects around $25 million of outflows, equivalent to nearly 11 million shares or about half a day's average daily volume, in the first tranche.