Aggressive monetary policy tightening, high inflation, low consumer confidence and the geopolitical situation rattled market sentiment in the first half of calendar year 2022.
With the US Federal Reserve likely to become more aggressive in its policy with the latest inflation figure above 9%, most experts see the US economy sliding into a recession by the end of 2022.
According to them, the impact of a recession in the world’s largest economy will be felt in most global markets in the coming months.
“With the pace of growth slowing rapidly and the US Fed committed to restoring price stability, we expect a mild recession in the US starting in the fourth quarter of 2022,” according to Nomura.
So, are there stocks and sectors you can invest in at a time when the economy is facing recession-related headwinds?
Ambareesh Baliga, an independent market analyst, said BFSI was doing well amid rising interest rates. Slowdown in the US, Europe a blessing in disguise for India and commodity prices are likely to calm down, he said. Defence, defense-related stocks are doing well. Probable gains for the IT, pharmaceuticals and specialty chemicals sectors.
Those at Credit Suisse Wealth Management recommend buying selectively. As a strategy, they remain defensive in the short term and suggest investors focus on the domestic economy versus the corporates.
“Our favorite short-term sectors include healthcare, consumer staples, autos and financials. We still maintain our bearish outlook on the IT and metals sectors,” says Jitendra Gohil, Head of Research on Indian equities, Credit Suisse Wealth Management.
On Thursday, markets are expected to remain range bound. Mphasis, PVR, RBL Bank and SRF are some of the top companies expected to report their June quarter figures.