Volatile week seen ahead of election outcome

Reuters Market Eye - 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 percent 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 be 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 EVENTS/FACTORS TO WATCH

Mon: April CPI (5:30 p.m)

March industrial output (5:30 p.m.)

Media to publish exit poll results (starting 6:30 p.m.)

Wed: Debt/FX markets closed for a local holiday

April WPI (around 12:00 p.m.)

RBI to release fortnightly money supply data

Thurs: RBI board meeting in Shimla

Fri: National election outcomes throughout the day

(Reporting by Swati Bhat)