5 Big Opportunities in CW360’s 2019 Election Prediction Market
Top 5 Predictions with high volume and low price (>400 units and below 20 points per unit)
1. Undoubtedly, the most in demand prediction is BJP 211 to 225 seats
The price is up more than 100% since launch and 30% over the last one week. It is slightly conservative when compared to the last set of opinion polls but the risk is relatively low as it is only slightly pessimistic to the opinion polls
2. DMK 24 to 27 seats
This has almost doubled during the last one week and priced at just 9 points. Even though opinion polls have suggested 30+ for DMK, participants are not trading heavily on DMK 31+ suggesting that the final prediction could be closer to this.
3. BJP 226 to 255 Seats
This is exactly in line with the Opinion Polls. This is also lower than the 2014 election result which most are expecting. While the price has trended down, it is still heavily bought and at 14 points quite inexpensive.
4. Congress to win between 66 and 80 Seats
Some of the more conservative opinion polls have put UPA between 120 and 130. At this level and excluding RJD, NCP, DMK and JDS, the Congress could end up close to this range. While demand is not as crazy as the above 3 predictions, it is quite inexpensive at 10 points with a 40% jump in one week though the price has been stable in the last few days. A must have to manage risk in case of a smaller than expected swing against the BJP
5. Congress to win between 111 and 125 Seats
Some of the more aggressive opinion polls have put UPA close to 150. At this level and excluding RJD, NCP, DMK and JDS, the Congress could end up close to the bottom end of this range. While demand is not crazy, at 11 points per unit, there is no harm in it being a small part of your portfolio to protect for a bigger than expected swing in favour of the Congress.
There are many other value predictions if one looks at them closely. Portfolio management must prepare for unexpected swings one way or the other with a bias towards your own sense from the ground. Given that your units become ZERO in case your prediction goes wrong and you get 100 bonus points per unit if your prediction comes true, portfolio management becomes even more critical.
Here are some more clues on where the elections are headed
2019 Election Predictions Update using Google Trends
The Gap between BJP and Congress has reduced by 18% points. In 2014, 46% gap translated to nearly 12% advantage for BJP. That would mean that the BJP Congress vote share gap could reduce to about 7-8% in 2019
Let us now look at States where BJP is competing with Congress
The Gap between Congress and BJP is down by 27% points (base of 48%)
The Gap between Congress and BJP is down by 18% points (Gap was 30%)
The Gap between Congress and BJP is down by 26% points (Gap was 49%)
The Gap between Congress and BJP is down by 14% points (Gap was 44%)
Looking at the above 4 States, it is clear that the losses are the highest in Chhattisgarh followed by Gujarat and Maharashtra.
In Chhattisgarh for example, -15% in assembly election led to a 10% advantage for Congress. In the Lok Sabha election 30% gap led to 10% advantage for BJP. With a 12% advantage now for BJP, BJP is likely to end up closer or with slight advantage over Congress in 2019 which might lead to a 3-4 seat loss over 2014. There could be similar losses in Gujarat and Maharashtra as well.
One can apply a simple 20% thumb rule in States where BJP is contesting versus Congress directly. There are approximately 150 such seats with Congress probably having won between 10 and 15. A 20% loss for BJP would mean that BJP would lose 25-30 seats to Congress alone.
This needs to be factored in your trading strategy.
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