The Indian equity market is facing heightened volatility amid worries over the economic fallout of the second wave of the COIVD-19 pandemic. The March quarter corporate earnings and the healthcare crisis is expected to govern the market trend going ahead.

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Meanwhile, the benchmark Nifty is stuck in a range of 14,200-14,500, and the investors are leaving no opportunity to book profits at higher levels. Sandeep Bhardwaj, CEO, Retail, IIFL Securities is of the view that during high volatility select banking and financial sector stocks will give the return in the portfolio, while the Pharma sector will be the hot cake for investors this year as well.

Speaking to CNBCTV18.com, he listed out certain stocks including Tata Steel, SAIL, Tata Motors, Morepen Lab and SBI for better returns.

Here's the full interview.

Will we see further consolidation in the market amid the second wave of COVID-19 pandemic and resultant semi-lockdown situations in many states?

The second wave of the pandemic seems more dangerous than expected and has already rattled the health infrastructure in the country. Despite the government’s efforts to boost the economy, massive health scare has forced lockdown and restrictions in many key states.

This is likely to be negative for economic growth if the restrictions continue for long enough to create economic and supply disruptions. We believe there will be further consolidation in the market during the second wave of COVID-19.

Which sectors will get impacted the most from this second COVID wave?

The hotel, tourism and aviation sector will get severely impacted in the second covid wave as they are already battered in the first phase. The demand for crude oil is down by almost 50 percent as compared to the pre-Covid level indicating the underlying economic distress.

Where will you put money amid the heightened market volatility and the second wave of the COVID-19 pandemic? Cyclicals or economy facing stocks?

We are recommending parking of money in pharma sector, insurance sector and financial sector. During high volatility, select banking and financial sector stocks will give a return in the portfolio, while the pharma sector and insurance sector also provide support to the investors.

The small and midcaps have outperformed. Do you think they will continue to see outperformance?

Yes, we believe small and midcap stocks will continue to outperform further. There are many good businesses that have weathered the Covid storm and showed excellent business resilience. We expect the focus of investors on such stocks this time.

Do you think we will see another rally in the pharma sector as the COVID-19 situation worsens in the country?

The pharma sector will be the hot cake for investors this year as well. We have already seen a huge rally across pharma sector stocks, but considering the massive health crisis the country is in, we will see huge demand for medicines and health-related products and infrastructure. New drugs, foreign partnerships will get faster approval. Therefore, pharma and healthcare sectors stocks will continue to be in focus.

Regulatory activity has highlighted lately, your views on the same

The regulatory framework is important for the stock market as it provides support to the market and safety for investors. SEBI has launched a peak margin system and margin reporting system at the moment increasing the trust of the investors in the market.

The March quarter earnings are likely to be strong across sectors. Will the Q4 earnings provide support to the market?

We expect good March quarter earnings across many sectors as the economy was seen reviving until the second wave of Covid outbreak in April. Good auto sales numbers, consumer sector numbers as well as good demand of businesses in the metals sector is likely to show in earnings.

Name few stocks that you recommend buying ahead of the earnings.

Investors can add, Tata Steel, SAIL, Tata Motors, Morepen Lab, SBI, ICICI Bank, Axis Bank and Bajaj Auto. In our view, these stocks may give a handsome return in the portfolio.

(Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.)