Shares of Indian food delivery and quick commerce company Swiggy fell about 2% on September 3, declining for a third consecutive trading session, after index provider MSCI announced it will remove the stock from its Global Standard Indexes effective September 7.

Why MSCI is removing Swiggy

MSCI's decision to exclude Swiggy from its Global Standard Indexes — the flagship country and regional benchmarks, including the MSCI India index, that form the basis for many of the world's most widely tracked emerging-market equity funds — follows the company's transition to full Indian ownership and control. The change in ownership status brings new foreign ownership constraints into effect, which limit the scope for further foreign investment in the stock. Under MSCI's index methodology, securities whose foreign ownership restrictions reduce their investability can be deleted from Global Standard Indexes.

The removal is expected to trigger passive outflows, as funds that track MSCI indexes will need to sell the stock to align their portfolios with the revised index composition. Such index-driven flows often concentrate around the rebalancing date rather than reflecting a view on the company's fundamentals. Jefferies has previously estimated that Swiggy could see outflows of around $400 million following its change to Indian-owned status (Economic Times report).

Swiggy's business performance

Despite the index-related pressure, Swiggy has set a target of achieving robust adjusted EBITDA growth by FY31, according to the company's stated outlook. In the first quarter of FY27, the company reported a net loss even as revenues showed an increase compared with the year-ago period.

Swiggy competes in India's food delivery market with Zomato's Blinkit and other players, while its quick commerce arm, Instamart, faces intensifying competition. India's quick commerce sector — which delivers groceries and everyday items from hyperlocal warehouses, known as dark stores, in minutes — has become one of the country's fastest-growing e-commerce segments, drawing heavy investment from incumbents and new entrants alike. Flipkart's quick commerce service, Minutes, has overtaken Swiggy Instamart in the number of dark stores across the top 10 cities, according to an Economic Times report.

Swiggy's shares were listed on Indian stock exchanges in November 2024 following its initial public offering. The stock will remain tradable on the exchanges after the index change; the MSCI removal affects only the stock's inclusion in the index provider's Global Standard Indexes. MSCI periodically adds and removes constituents through its quarterly index reviews, and such changes are routine events for index-tracking funds rather than a commentary on a company's listing status.

Market context

The removal takes effect on September 7 as part of MSCI's periodic index review process. Investors tracking the Sensex and Nifty 50 and broader market movements will be watching the stock's trading volumes around the effective date, when index-tracking funds typically rebalance their holdings. Beyond the immediate rebalancing, market observers will also be watching whether Swiggy's ownership status and the pace of foreign holding changes influence any future index classification decisions by MSCI.

Source: Economic Times Markets