CA Varun Agarwal (SEBI RA Regn.No. INH000014474)

Morning thoughts A reasonably good company in a tailwinded industry makes more money than a great company in a headwinded industry. An average sailor who is sailing with the tide goes faster than a great one against the tide.

Excited to meet you guys tomorrow in Bengaluru.

Indian markets witnessed a recovery session yesterday, with the Nifty closing at 24,395. It was a fairly encouraging session, particularly because we had started seeing some signs of weakness in the previous few sessions. Yesterday’s recovery brought some stability back into the market. Technically, the chart pattern is still slightly downward sloping, but there is no decisive breakdown as of now. Therefore, we do not see any reason to change our positive view on the markets yet. The macro environment is also gradually becoming more supportive. The U.S. 10-year bond yield remains under control, crude oil prices have stopped rising, and the Dollar Index is relatively stable. These are encouraging signals for Indian equities. Given this backdrop, there is a possibility that yesterday’s recovery may continue today, unless we see a fresh escalation in the West Asia conflict. Overall, we remain positive on the Indian markets and expect them to perform well in the near term.

U.S. markets had a positive session yesterday, with all three major indices closing in the green. The Dow Jones gained 0.13%, the Nasdaq rallied 0.81%, and the S&P 500 advanced 0.65%. The rally was largely led by technology stocks. U.S. futures are trading flat this morning. On the macro front, the U.S. 10-year bond yield is around 4.63%, while Brent crude oil has cooled further to around $86 per barrel. The moderation in crude oil prices is a positive development, particularly for India. The Dollar Index remains stable at 99. Gold is trading around $4,374, while silver is near $64. Asian markets are mixed this morning. Overall, global cues can be considered neutral for today. The positive U.S. close and cooling crude oil prices provide support, while flat futures and mixed Asian markets limit the upside cues. Indian markets are therefore expected to witness a largely flat start today.

Good Morning Friends ☕

Channel photo updated

Behari Lal Engineering IPO: My view is to apply for the Behari Lal Engineering IPO, but with moderate expectations. The company has a reasonably healthy balance sheet, good ROCE and improving profitability, and there are no major governance issues visible from the RHP. However, it is still a relatively small company operating in a cyclical and highly competitive steel-related business, historical growth has not been particularly impressive, and sustaining the recent improvement in margins will be important. The IPO is also largely an OFS, so a significant portion of the money is going to existing shareholders rather than directly into the business. At the proposed valuation, the stock does not look very cheap considering the commodity nature of a large part of the business. Therefore, I am comfortable applying for the IPO, but I would not go in with very high expectations regarding either listing gains or long-term returns.

Shiprocket IPO: My view is to apply to the Shiprocket IPO only with a lot of caution. The valuation at around ₹7,000 crore is not excessively expensive considering the company’s growth potential, but the bigger concern is the quality and predictability of the business rather than the headline valuation. The Core Business is profitable, but the Emerging Business is still significantly loss-making, consolidated profitability is weak, receivables and cash-flow quality need monitoring, and the company remains dependent on third-party logistics and ecosystem partners. In addition, there are some governance and control-related concerns, including historical audit-trail observations, statutory payment delays and pending merchant, COD and warehousing-related legal disputes. Therefore, while the growth opportunity is attractive and the valuation is not unreasonable, there are enough execution, profitability, governance and business-model uncertainties to justify a cautious approach rather than an aggressive IPO application.

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Indian markets witnessed a weak session yesterday, with the Nifty closing at 24,435. A part of the recovery towards the end of the session was due to the CAS settlement; otherwise, the closing would have been weaker. Until the previous session, the market was largely consolidating sideways, but yesterday we saw the first meaningful sign of weakness. The broader markets also participated in the decline, indicating some deterioration in overall sentiment. The 24,000 zone now becomes an important level to watch. If the weakness continues and the Nifty decisively breaks below 24,000, we will have to reassess our short-term bullish view. For now, since the index continues to trade comfortably above this level, we remain fairly positive on the markets. However, yesterday’s price action has certainly made us more alert, and we will closely monitor whether this was just a temporary correction or the beginning of a change in the short-term trend.

U.S. markets had a mixed session yesterday. The Dow Jones closed largely flat, while the Nasdaq gained 0.54% and the S&P 500 advanced 0.26%. U.S. futures are also trading flat this morning, indicating a lack of any strong directional cue. The macro environment has improved marginally. The U.S. 10-year bond yield has cooled to around 4.6%, while Brent crude oil has eased to approximately $87 per barrel. Both developments provide some relief for equity markets, particularly India, although crude oil continues to remain at relatively elevated levels. The Dollar Index is stable at 99. Gold is trading around $4,467, while silver is near $65. Asian markets are showing a mixed trend this morning. Overall, global cues can be considered neutral for today. The moderation in crude oil prices and U.S. bond yields is encouraging, but the mixed Asian markets and flat U.S. futures provide no strong directional trigger. Indian markets are therefore expected to witness a largely flat start, with crude oil prices and developments in West Asia continuing to remain important factors to watch during the session.

Good Morning Friends☕️

Indian markets witnessed some profit booking yesterday, with the Nifty closing weak at 24,471. The weakness was also visible in the broader markets, with several mid-cap and small-cap stocks coming under pressure. While the Nifty continues to remain above its important support zones, the short-term weakness in the market is gradually increasing. The biggest concern remains the West Asia conflict. There is still no clear resolution, which continues to create uncertainty for global markets. More importantly, Brent crude oil has now approached the $90 per barrel mark. If crude sustains above $90, it will become increasingly difficult for the Indian markets to deliver a meaningful rally in the short term. The broader macro setup is also slightly weak today. Unless we see some improvement in global cues, crude oil prices, or geopolitical developments during the session, a strong market-wide recovery appears difficult. In such an environment, the better strategy is to focus on stock-specific opportunities rather than expecting a broad-based index rally. Companies and sectors that have delivered strong Q1 results, healthy earnings growth, and positive management commentary are still witnessing good buying interest. This is where investors should focus their attention until the broader macro environment improves.