Home / Business and Economy / Swiggy Shares Dip Amidst MSCI Exit, Foreign Investment Concerns
Swiggy Shares Dip Amidst MSCI Exit, Foreign Investment Concerns
4 Sep
Summary
- Swiggy shares ended 2.5% higher despite upcoming MSCI index removal.
- Foreign ownership cap halved to 49.5% due to a shift to an inventory model.
- The stock has fallen 28.5% year-to-date, underperforming its index.
Indian online delivery platform Swiggy saw its shares close 2.5% higher on Friday, a gain achieved despite anticipation of its removal from MSCI indexes and the pressure of foreign capital outflows. Previously, the stock had experienced a significant rise of up to 5.61% before India's closing auction, a period when index-tracking funds typically rebalance their portfolios.
Analysts estimate that Swiggy faced approximately $360 million in passive outflows on the day of the MSCI index change. This event is viewed by some as a potential catalyst to absorb existing technical selling pressure. However, shares have declined 1.6% this week, partly due to foreign ownership nearing regulatory limits.
National Securities Depository placed Swiggy on a red-flag list, prompting a crucial decision. Shareholders approved a proposal allowing Swiggy to transition to an inventory model, which led to the overseas investment cap being halved from 100% to 49.5% on Tuesday. This tighter limit, coupled with the MSCI index deletion, has fueled concerns regarding potential outflows and liquidity-driven volatility in the stock.
Year-to-date, Swiggy's stock has seen a substantial decrease of 28.5%, sharply underperforming the Nifty mid-cap 100 index, which has registered a gain of 4.3% during the same period.
