** Eternal ETEA.NS, formerly known as Zomato, drops 4% to 229 rupees, top pct loser on Nifty 50 .NSEI

** Jefferies says proposal to convert to Indian owned and controlled company (IOCC), capping foreign ownership to 49.5%, may result in MSCI weight cut

** FPI holding in ETEA may have risen to 46% from 44.8% at the end of March, brokerage says

** If foreign ownership breaches 46.5%, stock will come under MSCI "red flag", notes Jefferies

** Further, if the 49.5% limit is breached, the foreign investor will have to divest their excess holdings to a domestic investor

** A potential MSCI weight cut may lead to $650 mln outflows from ETEA, says Jefferies

** In case of an immediate exclusion from MSCI index, ETEA may see outflow of $1.3 bln, the brokerage firm adds

(Reporting by Kashish Tandon and Vivek Kumar M in Bengaluru)

((Kashish.tandon@thomsonreuters.com))