'Conservatively cautiously optimistic': Allspring's Prashant Paroda explains India call

Allspring Global Investments' Emerging Markets Portfolio Manager Prashant Paroda describes the firm's position on India right now as "conservatively cautiously optimistic."

"We are looking at, sort of the laggards in the market, where expectations are low, and we are cautiously looking at whether the downside is limited, and once this war gets resolved and all the chatter about higher inflation sort of dies down, we could see a rally in those pockets as well," Paroda said.

Paroda said Allspring’s bets in Taiwan and South Korea have worked well amid the ongoing AI-driven rally.

On sectors that have already run hard — power and renewables in particular — he was more cautious. Allspring holds positions in some of India's largest power players, and the theme has delivered this year. But with some stocks having moved sharply since March, Paroda said private sector banks, which have lagged through this entire period, now look more attractive.

For the full interview, watch the accompanying video

Paroda said the investment firm expects geopolitical concerns to ease over time. He pointed to diplomatic discussions involving China, Iran and the possibility of a visit by US President Donald Trump to China as signs that tensions may move toward resolution.

These are edited excerpts from the interview.Q: Global markets across the board are rallying very nicely from the March lows. It's a ferocious comeback in the US for the NASDAQ AI-driven trends like Kospi and Taiwan. Is it time to just ignore the news and headlines related to the geopolitical tensions and keep riding this wave? What are you all doing at Allspring, and particularly the view on India now?A:

Our bets have been working out throughout March, and especially in the Taiwan and Korean markets, which continue to be strong with the AI wave. With regards to India, we are still conservatively cautiously optimistic. A lot of stocks have fallen in India. Some may be because of oil prices and the West Asia issue.

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But if this gets resolved, and possibly there's a visit by President Trump to China in 10 days, and the Chinese Premier and Foreign Minister actually met the Iranian Foreign Minister. So we think there's a lot of stuff going on in the background, which makes us feel cautiously optimistic that this is coming to a close and a positive close.

Q: This is the first time you said, conservatively cautiously optimistic. That's a new one. What does that really mean? What are you buying in India right now? What are you avoiding?A: So we're looking at stocks that have rallied since March. Some stocks have rallied very abruptly. We think they're kind of ahead of expectations. Some of the renewable stuff, some of the power stuff, has done well this year. We are looking at, sort of the laggards in the market, where expectations are low, and we are cautiously looking at whether the downside is limited, and once this war gets resolved and all the chatter about higher inflation sort of dies down, we could see a rally in those pockets as well.

Q: Just what do you own? As far as the power and power infrastructure theme is concerned, do you own anything here in India?A: We're not talking about specific stocks, but we own some of the largest players in this space, and those have done well so far this year. And the power story in India, there are years when it's very strong, and then there are periods when demand seems to kind of be lacklustre. This year seems to be a strong story.

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But these are sectors where there is some cyclical element as well, rather than structural elements. So if the stocks have run far ahead, then we think it's time to take some gains and look at parts of the markets which are private banks, which haven't done as well throughout this whole episode.

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