However, the relief may be temporary since prices are expected to return to over $120 a barrel level by December 2009.
A dip in oil prices by the end of 2008 will come along with an overall decline in agricultural commodity prices, which have been giving a tough time to policymakers due to their impact on inflation. Mecklai's analysis of data since 1970 shows that a bull run in farm commodities lasts between one and two years.
So the current run in crop prices, which started in 2005, with one commodity after another taking turns in rising, will be over by July. In addition, the report said, that the analysis also coincides with the view that there is a negative co-relation between commodity prices and dollar, which will strengthen.
But what may not be good news for Indian policymakers who are trying to combat inflation are the projections on the rupee. According to the analysis, at the end of December 2008, the rupee is expected to range between 41.75 and 43.25 against the dollar. But it is likely to appreciate to 38.05-40.10 against the US currency in December 2009, the report prepared in May said.
"The sentiment will be rocky. Inflows will come back since people are looking to invest in India," said Jamal Mecklai, chief executive officer of Mecklai Financial. At the same time inflation, trade deficit and politics will weigh on the markets, he said, while predicting that the Indian currency will trade in the 39-43 range against the dollar.
