Sectors and stocks to invest in H2-CY22

Indian markets are set to post their worst half-yearly performance in nearly two years with the Sensex and the Nifty50 slipping 9% each. 

The sentiment soured on account of an elongated geopolitical conflict between Russia & Ukraine, rise in key commodity prices and central banks’ actions to tame galloping inflation. 

The fall in mid-and small-cap indices was sharper with both these indexes slipping 12% and 15%, respectively on the BSE during this period.

Analysts believe the second half of calendar year 2022, too, will be marred by volatility. 

[Byte of Deepak Jasani, Head of Retail Research, HDFC Securities] 

A slowdown in corporate earnings is another headwind that the markets may have to face going ahead.

According to analysts at Credit Suisse Wealth Management, “Amid high inflation and aggressive tightening by the central banks, the downside risks to earnings growth are emerging. While we do not expect major earnings cut for Indian equities, some moderation in earnings growth cannot be ruled out, especially if global headwinds worsen further.”

That said, despite multiple headwinds, analysts suggest investors start nibbling into beaten down stocks and sectors selectively. 

Speaking to Business Standard, Deepak Jasani of HDFC Securities, says large-caps may come under pressure if FIIs/FPIs continue to sell. He says, IT, financials, consumer staples, discretionary, auto sectors also vulnerable to FII/FPI sell-off. New-age companies may also come under pressure. Metals, autos, banks may see bottom-fishing. 

On Thursday, markets are likely to remain volatile on the last day of Futures & Options expiry for the June series.