Weekly Newsletter - May 26 2012

After a long time, the main Indian stock indices managed to register weekly gains. The steep petrol price hike probably did the trick as it sparked off expectations of few more bold policy actions from the usually lethargic UPA II. But, it didn’t take much time for that perception to change as reports of a partial rollback in petrol prices started doing the rounds. Also, an EGoM scheduled for Friday to consider revision in other petroleum products was deferred amid stiff political backlash and public outrage. Whether UPA II manages to improve its scorecard in the remaining two years of its term is anybody’s guess. Things have not exactly been rosy for the Congress-led regime, and the biggest victim of the policy paralysis has been the rupee. Although, the local currency has recovered slightly in the past two sessions, it remains to be seen if it can sustain the pullback in the absence of progress on the policy front. Next week’s release of GDP data will be of interest to market participants amid fear of a deeper downturn.