The first 10 days of June have been majorly positive for the benchmark indices. However, in a recent report, IIFL Securities has cautioned against this optimism.

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"Markets which are riding on optimism of gradual re-opening of economic activities worldwide must be extremely cautious, as yet there is no breakthrough on COVID-19 vaccine and its adverse effect on global economic fundamentals are not clear," the brokerage said in the report.

It is noteworthy that Indian equities declined in May with Nifty and Sensex down 2.8 percent and 3.8 percent, respectively as market participants were disappointed with the economic package amid rising COVID-19 cases.

According to IIFL, Indian equities are likely to see spells of volatility with a downward bias as various economic and industry data are expected to be severely weak despite partial relaxation of the lockdown.

It has advised equity investors with significant risk appetite to look

to invest in the stocks that are key beneficiaries of rural growth.

Moreover, the brokerage recommended investors to select high-quality stocks from retail, chemical, consumer staple, and the pharma space as they

may remain resilient during periods of volatility.

IIFL has also come up with three kinds of portfolios amid this pandemic - Aggressive, Moderate and Conservative.

The aggressive portfolio targets above-market returns using high beta and midcap ideas, however, the moderate portfolio uses a multi-cap approach to reduce volatility and conservative portfolio is built with objectives of less volatility and capital protection, informed the brokerage.

Here's a look at the three portfolios advocated by the brokerage:

However, investors with a low-risk appetite for direct equities can

continue to invest in equities through mutual funds in a staggered manner, it added. Such investors are also advised to top up their SIP amount to bring down their average cost, noted the report.