Markets stare at worst-ever FPI sell-off in 2018: All you need to know

(FPIs) have sold the highest-ever $9.1 billion worth of and equity in the first nine months of 2018. This is also the first-ever year in which overseas investors have been net sellers in both the debt and

At $7.1 billion, the selling in debt is by far the most, followed by $5.9 billion in 2013. Then too, the rupee, bond and stocks had tumbled after the announced the end of quantitative easing (QE).

The sell-off this year has come when the Fed has embarked upon delivering the biggest annual rate hike in more than a decade. The central bank has already lifted rates thrice this year by 75 basis points to 2.25 per cent, and another quarter-point hike is expected in December.

Meanwhile, the 10-year US Treasury yield has climbed to a 4-year high of 3.2 per cent. Experts say outflows from Indian this year are on expected lines, as the Fed had signaled its tightening plans in advance. Not just India, but Asian peers such as Indonesia, South Korea, Thailand, Taiwan and The Philippines have seen sharp outflows this year. Most others, however, have seen positive flows into bond markets. Sharp inflows into (MFs) largely helped offset outflows from India. However, flows into equity MFs are moderating. If FPI outflows accelerate further, counter-balancing by MFs could be a challenge.

Markets stare at worst-ever FPI sell-off in 2018: All you need to know

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