Eternal Shares Rise On MSCI Inclusion News
Shares of Eternal Ltd. rose to 3% on Tuesday, with the stock trading at Rs 294.63 apiece. This surge in stock price came after the company released its latest shareholding pattern yesterday evening.
Currently, Eternal holds only half weight in the MSCI index due to previously limited foreign room. However, the latest data shows that foreign room has now crossed the 25% threshold, making the stock eligible for full MSCI weight.
What Is MSCI Index And Why Is It Important?
The MSCI index is a widely followed stock market index that tracks the performance of stocks in various countries, including India. It is used by investors and financial institutions to measure the performance of their investments and to make informed decisions.
For Indian investors, the MSCI index is important because it provides a benchmark for the performance of Indian stocks. It also helps to attract foreign investment into the Indian stock market, which can lead to increased liquidity and higher stock prices.
Impact Of MSCI Inclusion On Eternal Ltd.
The likely inclusion of Eternal Ltd. in the MSCI index is expected to have a positive impact on the stock price. Analysts anticipate that this change will be reflected in MSCI’s February review, which could trigger passive inflows of $390 million approximately.
This influx of foreign investment could help strengthen the stock’s position further in global portfolios, leading to higher demand and higher prices. Indian investors who already hold Eternal Ltd. shares may see an increase in the value of their investments, while those who are looking to buy may want to consider doing so before the price rises further.
Eternal Ltd. Share Price Today
The scrip rose as much as 4.22% to Rs 297 apiece during the day, compared to a 0.03% decline in the NSE Nifty 50 Index. Total traded volume so far in the day stood at 26.32 times its 30-day average, indicating strong interest in the stock.
The relative strength index was at 33.57, which is a measure of the stock’s recent price changes. A low RSI indicates that the stock may be oversold, while a high RSI indicates that it may be overbought.
Analyst Ratings And Price Targets
Out of 33 analysts tracking the company, 29 maintain a ‘buy’ rating, and none are maintaining a ‘hold’ rating, while four are maintaining a ‘sell’ rating, according to Bloomberg data. The average 12-month consensus price target of Rs 379.16 implies an upside of 29.5% from current levels.
This suggests that analysts are bullish on the stock’s prospects, despite some challenges that the company is facing. Recently, Eternal Ltd. received two Goods and Services Tax (GST) demand orders amounting to over Rs 27.56 crore, including interest and penalty.
Challenges Facing Eternal Ltd.
The GST demand orders have been received with respect to short payment of output tax for the period between April 2020 and March 2022. This could lead to a negative impact on the company’s financials and may affect investor sentiment.
However, it’s worth noting that the company is the parent entity of Zomato and Blinkit, which are well-known brands in the Indian market. This could provide a boost to the company’s revenue and profitability in the long term.
Conclusion
In conclusion, the likely inclusion of Eternal Ltd. in the MSCI index is a positive development for the company and its shareholders. It could lead to increased foreign investment and higher stock prices, which would be beneficial for Indian investors who hold the stock.
However, it’s essential to keep in mind that the stock market is subject to various risks and uncertainties, and investors should do their own research and analysis before making any investment decisions. They should also consider their own risk tolerance and investment goals before investing in the stock market.
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