Stocks and sectors to bet on as the US economy faces a recession

Aggressive monetary policy tightening, elevated inflation, weak consumer confidence and geo-political situation have dented the market sentiment in the first half of calendar year 2022. 

With the US Federal Reserve likely to get more aggressive in its policy stance with the latest inflation print coming in over 9 per cent, most experts see the US economy slip into a recession by 2022-end. 

The impact of a recession in the world’s largest economy, they feel, will be felt by most global markets over the next few months.

“With rapidly slowing growth momentum and the US Fed committed to restoring price stability, we expect a mild recession in the US starting Q4-2022” according to Nomura.

So, are there any stocks and sectors you can invest in at a time when the economy faces recession-related headwinds?

Ambareesh Baliga, Independent Market Analyst says BFSI does well amid rising interest rates. Slowdown in US, Europe a blessing in disguise for India and  commodity prices are likely to cool off, he says. Defence, defence-related stocks to do well. Gains likely for IT, pharma, specialty chemical sectors.

Those at Credit Suisse Wealth Management recommend buying selectively. As a strategy, they remain defensive in the near-term and suggest investors focus on domestic economy facing companies.

“Our preferred sectors in the near term include, healthcare, FMCG, autos and financials. We still maintain our bearish outlook on the IT and metals sectors,” says Jitendra Gohil, Head of India Equity Research, Credit Suisse Wealth Management.

On Thursday, the markets are likely to remain range-bound. Mphasis, PVR, RBL Bank and SRF are some of the prominent companies that are scheduled to announce their June quarter numbers.