Greece, Spain, inflation data will keep markets on the edge

The markets had a 5% run up this week on the back of rate cut hopes, the advent of monsoon, monetary easing in China and fresh hopes of stimulus from central banks across the globe.

As we head into the next week inflation data will hold centre stage, primarily because it will decide what the RBI will do on repo rates.

The markets have rallied 5% this week on hopes that there would be a repo rate cut. Should the inflation come in at elevated levels, it raises the possibilities that the RBI would keep repo rates on hold.

This is likely to spook the markets again, which are clearly factoring 25 basis points cut in the repo rate, when the RBI meets to review its monetary policy on June 18, 2012.

Spain and Greece are likely to keep the markets on the edge once again. If there are lack of indications that a bailout for Spain's banks are progressing well, there could once again be a sell-off in global markets.

In Greece the leftist parties, which oppose a bailout and austerity measures are said to be gaining ground. Should they be able to form a government it could spell disaster for the markets. Elections in Greece are slated for June 17, which could make the next few weeks extremely interesting for the markets.

GoodReturns.in