Brokerage house Angel Broking expects the market's consolidation to continue in the near term as it believes the government will take some time to bring the COVID-19 situation under control.

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The second wave of the virus is turning out to be bigger than the first one with India reporting over 2.5 lakh new cases a day now as compared to 1 lakh cases during the peak last year in September.

In the last one month, the benchmarks Sensex and Nifty have fallen around 3 percent on concerns related to economic recovery as states considered partial lockdowns and curfews.

While the sharp increase in COVID cases is a matter of concern, the low mortality rate and expectations of a ramp-up in vaccination over the next few months should help limit the fallout from the second wave, it said.

So where should one invest? The brokerage believes that sectors that are rural-focused or will benefit from increased digitization and import substitution not only offer long-term revenue visibility but are least likely to be impacted due to the second wave.

Hence, it maintains a positive stance on sectors like IT, pharma, tractors chemicals and agrochemicals.

Top picks include HCL Tech, IDFC First Bank, Federal Bank, Shriram City Union, NRB Bearings, Escorts, GNA Axles, Ashok Leyland, Galaxy Surfactants, Metropolis Health, Carborundum Universal, PVR, and Crompton Electricals.

Abundant global liquidity and positive global sentiment should provide some support to the markets despite the surge in the infection cases in India, the brokerage said. "There has been a global risk-on rally as the US Government has been successful in passing the third US stimulus package of $1.9 trillion."

Moreover, the US has also ramped up its vaccination program and is well on the path of vaccinating the entire population by July 2021 which is positive, said the brokerage.