Check out: Prabhudas Lilladher's stock bets for 2013

Year 2012 has not been good for the PSU banks. In an interview to CNBC-TV18, Ajay Bodke of Prabhudas Lilladher says the RBI should deliver atleast 25 bps rate cut in January meeting. "Hence, we are recommending investors to look at some of the interest sensitive names. We are looking at upgrading Punjab National Bank as a buy. We continue to accumulate the other biggies in PSU banking space like SBI, Union Bank of India, Bank of Baroda and Bank of India," he adds.

In 2013, he says, one has to balance interest rate sensitive with defensives. "One will have to also have certain part of the portfolio in defensives. It will be a mix of the two. On the defensive side, sheer valuations make us positive on some of the ITs like Wipro and Infosys. In the pharmaceutical side, we continue to be very positive on Dr. Reddy's Laboratories and Ranbaxy in the largecap names," he elaborates. Also read: Sanju Verma sees Sensex at 22K by Mar 2013, suggests bets Below is the edited transcript of his interview on CNBC-TV18. Q: Do you have any stock specific approach rather than the Nifty? A: All of us are waiting for the next move from the Reserve Bank of India’s end. We believe that the RBI should deliver atleast 25 bps rate cut in January meeting. Hence, we are recommending investors to look at some of the interest sensitive names. On the banking side, we were not so positive on the public sector undertaking (PSU) banks till sometime back. But our banking analyst has relatively turned positive on some of the largecap banking names. He has looked at 1998 to 2003, 2004 to 2007 and 2009 to 2011 periods, and looked at the various operating matrix in those period. His conclusion essentially has been that the return on equity (RoE), in 2009 to 2011 cycle, is unlikely to repeat. Hence, the ROEs in the current cycle may not dip at the same time to the same single digit levels as 1998 to 2003. We are looking at valuations, in the PSU banks, which will be similar to 2004 to 2007 cycle. Based on that analysis, we are looking at upgrading Punjab National Bank as a buy. We continue to accumulate the other biggies in PSU banking space like SBI, Union Bank of India, Bank of Baroda and Bank of India. Q: What is your view on the private bank space and the non banking financial companies (NBFC)? A: Bank license, we had calls with some of the leading bankers as well as some domain experts. We believe that it will be a good 12 to 15 months from today that the RBI will be, in our view, in a position to start looking at issuing bank licenses. We are advocating investors to look at rural focused NBFCs with a medium-term perspective. Mahindra & Mahindra Financial Services has been among our top pick for the last three months. The stock is doing extremely well. We believe that there is still some room for upmove from a fundamental perspective. This trigger could come in the medium-term. We also like Shriram Transport. On the wholesale lending side, two institutions that come to mind are IDFC and L&T Finance Holdings. So, if one has to create a bouquet with a medium-term perspective to play on the issuance of new bank licenses, these are the names that you can look at, very strong management. At the same time, there are fundamental triggers to ensure that the business runs very well in the medium-term perspective. Q: What sort of approach would you advocate in 2013? Would it be stocks that are possibly beaten down at the current levels, hence they have further potential in 2013 or stocks like pharmaceutical space, which is already trading at premium valuations and you expect further upside? A: From the macro perspective, we are looking at next year to year-and-a-half of benign interest rate environment going forward. We are also looking at some of the seminal reform measures that have been announced by the government, some of the reforms on the fiscal consolidation side or the intent of reforms on fiscal consolidation side being taken positive with the market. We will have to wait and see how much further cut in expenditure the government is able to implement. Will it be able to contain the slippage in fiscal deficit to 5.3 percent as Chidambaram has been strongly mentioning publicly? Any slippage, by 0.5 or 0.7 percent, will certainly be taken negative by the market. We will be looking at beneficiaries of a fall in interest rate sensitive, banks being top out there. At the same time because of fact that the government yet has to walk the talk, as far as fiscal consolidation is concerned, one will have to also have certain part of the portfolio in defensives. It will be a mix of the two. On the defensive side, sheer valuations make us positive on some of the ITs like Wipro and Infosys. TCS analyst meet gave an indication that calendar year ’13 will be more or less similar on similar lines as calendar year ’12, as far as demand environment is concerned in the major geography of US. So, you have to balance the interest rate sensitive with defensives like Wipro and Infosys. In the pharmaceutical side, we continue to be very positive on Dr. Reddy’s Laboratories and Ranbaxy in the largecap names.