The recent rally in the Indian markets was fuelled by the better than expected June quarter earnings. The June quarter was expected to be subdued given as the coronavirus-led lockdown impacted the demand but most companies across sectors either beat the expectations or reported in-line results.

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Benchmarks Sensex and Nifty rose around 16 percent each in the quarter while the midcap index was also in-line with the benchmarks indicating buying across segments.

"The June-quarter corporate earnings for our coverage universe were better than our muted expectations. Sales were impacted by the COVID-led lockdowns, however, Corporate India undertook stringent cost control measures to protect their bottom line and arrested the decline in operating profit," Motilal Oswal said in an earnings review note.

It added that healthcare, utilities, private banks and technology sectors reported profit growth, while autos, retail, metals

and telecom posted losses.

However, overall, management commentaries indicated improvement in demand during the quarter after easing of the lockdown restrictions.

The brokerage has come out with its top stock picks post the June quarter earnings.

The brokerage's preferred largecap picks

include Reliance Industries, HUL, Infosys, Bharti Airtel SBI, Titan, Dabur, Divi's Labs, M&M, and ICICI Prudential.

Meanwhile, in the midcap space, MOSL likes Tata Consumer, Motherson Sumi, Alkem Labs, IPCA Labs, AU Small Finance Bank, Gujarat Gas, Crompton Greaves Consumer, ICICI Securities, Aditya Birla Fashion, and IndiaMart.

'Cost control and cash preservation were effectively deployed as tools to offset the headwinds from the lockdown induced volume declines. Just 6 percent EBITDA decline in the Nifty is a testament to the ability of India Inc to drive cost control when needed," the brokerage stated.

Healthcare and Technology earnings stood out – both in absolute and

relative terms – and MOSL expects these sectors to show continued strength ahead.

Rural India outperforming urban clusters is a consensus commentary from all sectors and as the lockdowns are eased and demand recovery takes shape gradually, it added.

It expects the commentaries to improve, but further upside hereon hinges on-demand/earnings normalization and abatement of the spread of COVID-19 pandemic.