Stock markets appear to have turned the tide after a dismal 2022. But with the path of interest rate hikes still uncertain, and a potential recession still a possibility, market watchers are having a tough time deciding if this is another bear market rally or the start of a new bull market. "There are basically two stories in the market today," Rahul Ghosh, portfolio specialist, equity division at T. Rowe Price, told CNBC's "Street Signs Asia" on Thursday. "The optimistic [one] is the story of disinflation ... The slightly more negative [one] is the story of sticky inflation, which then has implications for either the path of rate hikes or the length of rates staying higher." Be 'defensively offensive' In this environment, Ghosh said investors should look to be "almost defensively offensive." "What I mean is not being defensive into just staple names. You can look for earnings growth or be a little bit more broad-based on exposures while looking for upside," he added. Ghosh advised focusing on less cyclical names and on stocks with quality earnings stability. "Maybe think about geographical diversification too, because, for the first time in a long time, we have got a world that isn't solely being driven by the U.S. Federal Reserve," he added. Ghosh summed up his investment strategy succinctly in notes to CNBC: "Most importantly, [investors] have to continue to focus on companies that can deliver solid growth in this environment — generally we have seen these companies rewarded so far this year." Stock Ideas One of Ghosh's top stock picks is chip maker Nvidia , which he described as a "clear winner" in the artificial intelligence "arms race." He said that while Nvidia's stock price has moved up significantly over the past month, he remains bullish on revenue drivers such as the data center platform and cloud computing solutions. "Cloud might be slowing but it's not dead. We're talking about slowing from 50% growth rate to 30%, and potentially picking up next year. That's not something to sneeze at," Ghosh said. Insurer AIA is another of Ghosh's top picks. The company is a "best-in-class" insurer with 50% revenue exposure to China and Hong Kong, according to Ghosh, making it a safer play on the China reopening story without the risks of domestic regulatory issues. Rounding off his picks is Chubb — the world's largest property and casualty insurer. Ghosh believes the company will achieve double-digit growth in earnings per share over the next few years, driven by improved underwriting and better investment income in a higher-interest-rate environment. He added that the market has underappreciated management's ability to react to higher risks of climate change-induced events, giving investors a chance to buy the stock at a "Covid-low" double-digit price-to-earnings ratio, lower than the historical average. 'It's also a way to think about a world where the data is conflicting about the strength of the economy. Are we going to potentially slow down and have a hard landing, a no landing, or a soft landing? Insurance is a way to play that without necessarily having the risk that you get from [investing] in a commercial bank," Ghosh said.
