A global sell-off in stocks that started in May is not over and may only be just starting, Abhijit Chakrabortti, global equity strategist at JPMorgan Chase & Co., said on Tuesday.

This is nothing compared with what we may see late in the summer and early October -- once slower growth finally sinks in and expectations for higher benchmark rates, at 6 percent or even more, come out, Chakrabortti told the Reuters Investment Outlook Summit in New York.

Chakrabortti said the market correction may exceed 10 or even 15 percent before it abates. In some sectors, such as materials, commodities and certain consumer staples, including Wal-Mart Stores Inc. and Procter & Gamble Co., declines may surpass 30 percent.

Sectors most dependent on growth and the companies most dependent on volume and price declines, which also includes tech companies, should be avoided, he said.

JPMorgan's model asset allocation portfolio is recommending clients to invest 20 percent of their holdings in cash and 25 percent in bonds. The remaining 55 percent is distributed among equities in the United States, the UK, Western Europe and Japan. Still, the portfolio is underweight in U.S. stocks.

People are still conservative on inflation and on interest rates, he said. I don't believe the economy is heading into recession, but growth is going to slow and GDP and earnings will expand at subpar levels for a couple of quarters.

In the U.S., according to Chakrabortti, few sectors, including telecommunications and consumer staples -- except for Wal-Mart and P&G -- may outperform the market.

We like the big telecom providers such as Verizon and AT&T, as well as Colgate , he said.

One stock Chakrabortti strongly recommends is Altria Group Inc., the parent company of Kraft Foods Inc. and Philip Morris International.

Phillip Morris should be at the core of everybody's equity portfolio, he said. They know how to operate in a very tough environment that includes litigations, patent wars and negative image. And when was the last time you saw the price of any of their products decrease?

Chakrabortti recommends a zero allocation into emerging markets stocks this year, even after double-digit declines in the past month in Indian, Russian and Brazilian stocks.

One of the reasons why we still didn't see emerging markets falling even lower is because people are not selling yet, he said. It's hard to get a selling bid in places like India and Russia, where foreigners simply did not cash their stocks yet. But in my opinion to be holding onto those stocks may prove to be an even bigger mistake right now.

Still, he favors foreign assets in countries such as Japan and Korea.

If there's a country that could benefit from inflation and higher rates, that country is Japan, he said. The Nikkei may double in a couple of years and I'm a long-term bull on the Japanese yen.

The only problem in Japan is that a big portion of Japan's equity market is comprised of cyclical stocks that are dependent of growth outside of the country, he added. And that may hurt, or at least increase volatility in their stock markets for some time.