India debt and foreign exchange markets gear up for a volatile week with election results due to be unveiled on May 16 after a five-week long process.
Traders say results that show Bharatiya Janata Party winning a majority, or coming close to it, could spark further gains in the rupee and bonds, although markets have already rallied this year in anticipation of such a victory since the opposition party is seen as being more business friendly.
The rupee has gained 3.17 per cent so far this year, the benchmark 10-year bond yield has fallen 8 basis points so far this year.
Before the actual results, trader will pay close attention to exit polls from media organisations, which will be allowed to release them starting at 6:30 p.m. on Monday, the last day of voting.
Although exit polls have proven unreliable in the past, traders say they are likely to impact markets on Tuesday.
India is also set to release consumer price inflation data on Monday, the last one before the RBI's next policy review on June 3.
Key factors to watch
On Monday, consumer price index-based inflation data for the month of April is expected at 5:30 p.m. Industrial output data will also be released around the same time. Starting 6:30 p.m., media will be publishing exit poll results.
On Wednesday, Wholesale price index-based inflation data is due around 12:00 p.m. The RBI is expected to release fortnightly money supply data on the same day.
Debt and forex markets in India will be closed for a local holiday on Wednesday.
The Reserve Bank of India board will be meeting in Shimla on Thursday.
National election results will be out on Friday.
Copyright @ Thomson Reuters 2014
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