3 THINGS THAT WILL MOVE MARKETS ON MONDAY OPEC+ CUT, EXIT POLLS & US MARKETS

December 9, 2018

 

 

 

 

 

1. OPEC+ PRODUCTION CUT :

 

On Friday late evening Vienna OPEC+ announced a 1.2Mn b/d production cut with a base of October 2018 for six months period from 1st January 2019 with a review in April 2019. This was agreed after a lot of discussions and last minutes changes specially to include Iran on the deal.

 

This is close to our base case of 1.3Mn b/d cut since the details of country-wise cut is provided we have calculated an estimate of the same below.

There is another two factors which are not included is the natural decline in Venezuela which is exempt but has shown continuous monthly decline specially now that they have made all oil sales in petro crypto compulsory and Iran which might have drop to 2.8Mn b/d due to sanctions reducing the pick up. This might have 300K-350K b/d at least additionally.

       

TARGET INVESTING VIEW:

 

WE ARE POSITIVE CRUDE WITH RANGE OF $85-90/BBL TILL APRIL 2019.

 

STOCKS WE ARE POSITIVE – ONGC & OIL AND NEGATIVE – HPCL/BPCL/IOCL

 

 

2.STATE ELECTIONS EXIT POLLS :

 

On Friday late evening Exit polls of the state elections were released and there was no clear opinion to be formed of which party will win which state. This has led to more confusion between the speculators and media. Thus, results of the same become more important when exit polls come out like this.

 

We are not estimating any outcome here but trying to simplify the exit polls and make it more untestable for our readers.

Out of five the exit polls we collected in THREE show polls there is clear WIN for TRS that is 60% of the total polls collected.

 

Out of eight the exit polls we collected in FIVE polls show there is clear WIN for CONGRESS that is 63% of the total polls collected.

Out of eight the exit polls we collected in ONE poll show there is clear WIN for CONGRESS & ONE poll shows there is clear WIN for BJP that is 13% each of the total polls collected.

Out of nine the exit polls we collected in TWO polls show there is clear WIN for CONGRESS & TWO polls shows there is clear WIN for BJP that is 22% each of the total polls collected.

 

TARGET INVESTING VIEW:

 

WE BELIEVE THAT CHHATTISGARH & MADHYA PRADESH RESULTS WILL BE MOST IMPORTANT FOR THE MARKETS IN ADDITION OF ANY CHANCE OF SWITHC IN RAJASTHAN WILL BE A VERY POSITIVE FOR MARKETS.

 

WE EXPECT NIFTY TO BE NEGATIVE ON THESE EXIT POLLS AND SEE HEAVY SELLING DUE TO NO CLARITY ON TRENDS IN TWO STATES.

 

 

3. S&P 500 ALGORITHM SELLING:

 

On Friday there was heavy selling on S&P 500 Index and this is was follow up selling to the CTA Funds ( Hedge funds using future contracts through algorithms) of $35Bn as it was able to maintain above 2711 levels.  This was triggered on Tuesday 4th December 2018 as the CTAs shifted from 100% Long US to 65% Long US which led to $32Bn selling.

 

 

As per reports if 2567 level is broken on S&P500 there will CTAs adjustment that will lead to a selling of $122Bn.

 

TARGET INVESTING VIEW:

 

WE BELIVE 2567 IS CRITICAL LEVLS AS THESE FUNDS EXECUTION IS DONE BY COMPUTERS AND THERE IS NO HUMAN INTERVENTION. ON TUESDAY CME (CHICAGO MERCANTILE EXCHANGE) MENTIONED THAT THEY INTERVENED TO RESTRICT THE FALL IN THE MARKETS.

 

THIS IS WILL PUST PRESSURE ON NIFTY AND MIGHT RESULT IN FURTHER FALL.

 

 

 

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