She pointed to opportunities in what she described as the “picks and shovels” of the AI theme. “We prefer the shorter cycle plays here, being able to reprice commodities quite quickly, so you have electrical equipment, gen sets, cables, and wires, – a whole bunch of plays that can play out on the data centre story.”
However, she cautioned that investors need to be mindful of elevated correlations within the sector, similar to trends seen across regional markets. With many of these stocks rising more than 100% over the past year, valuations have become a key concern.She suggested that investors should focus more on company-specific fundamentals rather than taking a broad top-down approach to the data centre theme.
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India currently has just over one gigawatt of operational data centre capacity, with a much larger pipeline expected over the coming years, which could drive significant capital expenditure.Apart from AI-linked industrial names, M&G Investments has also made tactical portfolio adjustments following geopolitical tensions in the Middle East.
Mundra said the firm has increased exposure to upstream oil and gas companies while reducing positions in sectors such as airlines, reflecting concerns around higher commodity prices and oil market volatility.
M&G Investments has been underweight on IT services and consumer staples for the last two years, mainly due to valuation concerns and slower growth prospects.
On foreign institutional investor (FII) flows, Mundra said India continues to remain attractive despite valuation concerns. She highlighted improving earnings momentum but pointed out that currency stability remains a key factor for sustained overseas inflows. “Stabilisation in the rupee would be much helpful for FII flows to come back to India,” she said.
For full interview, watch accompanying video
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