Sensex and Nifty fell around 20 percent in 2020 as coronavirus crisis led to a market rout for domestic as well as global indices. For India specifically, COVID-19 has hit at a point in time where the economy was anyways going through a cyclical downturn.

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Even though the market valuations look attractive, experts have advised caution to get through this volatile period.

Axis Securities, in a recent report, believes that looking at valuation metric alone might not work in this environment as businesses are likely to face liquidity issues due to this crisis. It prefers industry leaders with strong cash flow for the current situation.

"With the steep drop in revenue in H1F21, companies which lack balance sheet resilience (high debt/equity and low cash) are likely to struggle to cover their fixed costs – and risk-averse banks are unlikely to incrementally lend to them. Hence we prefer industry leaders with net cash balance sheet/strong cash flow generating ability," it noted in the report.

The brokerage has also repositioned its portfolio, in tandem with the current market mood. It noted that Nifty stocks have 82 percent weight in its portfolio, while non-Nifty stocks hold the remaining 18 percent.

The brokerage is now 'underweight' on banking and financial stocks and has reduced weightage in the space to 28 percent from 36 percent earlier. It also added that defensive stocks now hold 47 percent of the portfolio. It is 'overweight' on telecom, utilities, and pharma space; 'equal-weight' on IT and 'underweight' on staples.

READ MORE: Chris Wood rejigs India exposure; removes ICICI Bank, HDFC Bank from portfolio

Meanwhile, weight of Reliance Industries stands at 10 percent in its portfolio from 7 percent earlier.

New additions to the portfolio include ACC (2 percent weight), Dr Reddy's (1.5 percent weight), and Cummins, HPCL, Hero MotoCorp, and Siemens (1 percent weight each).

Exits include Ashok Leyland, Carborundum, Finolex Industries, IPCA Labs, and Security and Intelligence Service (down to nil from 1 percent weight) and Varun Beverages (from 2 percent weight to nil).

The brokerage has also increased weights for Bharti AIrtel (4 percent to 5 percent), ITC (3 percent to 5 percent), Maruti ( 1 percent to 2 percent), NTPC (1 percent to 2 percent), Reliance Industries (7 percent to 10 percent), TCS (4 percent to 5 percent) and Tech Mahindra (1 percent to 2 percent.

Meanwhile, reductions include HDFC Bank, HDFC, HUL, ICICI Bank, L&T, and SBI.