Markets see Chinese turmoil holding back Fed rate hike

On the eve of the most crucial US Fed meeting in eight years which is expected to take a call on the long-pending rate hike, the domestic market is divided with the majority seeing Janet Yellen holding back primarily due to Chinese turmoil and its ripple effect across the globe.
The market players across various sectors have already factored in the delayed decision tomorrow and expect a calm market on Friday. The domestic markets are going to be shut on Thursday on account of a religious festival.
Fed chair Janet Yellen will create history of sorts if she decides to hike the near-zero rate which was launched after the US economy was pulled down by the 2008 crisis.

However, with the deepening crisis in China, the world's second largest economy, Yellen may take a more global look at the evolving global economic data prints.
Kotak Mutual Fund chief investment officer for debt Lakshmi Iyer told PTI: "We believe that the Fed may not hike the rates for two reasons. First, the Fed Futures, a probability curve that's a good indicator of its move indicates that rate hike may not take place. Secondly it is likely to be in a wait-and-watch mode keeping in view the turbulent Chinese economy."
A forex dealer at a state-run bank echoed Iyer. "It is generally seen that the world's most powerful central bank does not give surprises and its outcomes are according to what the market feels. We expect the US Fed not to hike the near zero rates of the past eight years and may initially delay it to December or even to March considering the global economic situations following the troubles in China," he said.

He expects the rupee to open flat at around 66.45-66.46 against the dollar when the market reopens.
According to bond market players, government securities have partially factored in that the Fed will postpone its hike decision to December.