Check out: Prabhudas Lilladher's largecap and midcap picks

The Indian market has been weak over the last few sessions. In an interview to CNBC-TV18, Ajay Bodke of Prabhudas Lilladher says on ground implementation of reforms and the pace and extent of rate cuts, which the RBI could unveil post January, are the key events to watch, in addition to the contingence of the risk-on trade.

According to him, there are multiple global headwinds that the market needs to overcome for the continuation of the rally. “The range, which I have mentioned, is 6,000 on the upside and 5,400 on the downside,” he adds. In the banking sector, he continues to remain positive on Axis Bank and ICICI Bank. "We are looking at a one-year target of around Rs 1,325 on Axis Bank and around Rs 1,200 on ICICI Bank. In the midcap space, we have been consistently advocating a look at Mahindra and Mahindra Financial Services, Yes Bank and Jammu and Kashmir Bank," he asserts. His other picks, in the largecap, are Dr. Reddy's, Ranbaxy and Wipro. In the midcap space, he also likes Amara Raja, and Torrent Pharmaceuticals. Houseviews: Expert tips to trade 4 buzzing stocks Below is the edited script of his interview with CNBC-TV18’s Mitali Mukherjee and Sonia Shenoy. Q: Going through your note, which lists out several concerns, but by the end you feel the market should still move to 6,000. Are you approaching with a buy on dips? How soon do you think that’s going to happen? A: The on ground implementation of reforms and the pace and extent of rate cuts, which the RBI could unveil post January, are the key events to watch, in addition to the contingence of the risk-on trade. There are multiple global headwinds that we need to overcome for the continuation of the rally. The range, which I have mentioned, is 6,000 on the upside and 5,400 on the downside. The winter session of parliament is crucial. The draft of Land Reform Bill hasn’t been to the industry’s fullest expectation. I think the other issues are some of the key announcements made by the government; how much the government is able to push through by evolving a consensus among its allies, opposition as well as within its own fold, so far as reforms, banking, pension, insurance and FDI in multi brand retail are concerned. Montek Singh Ahluwalia has mentioned that the policy on the pricing of imported coal should be announced in few weeks from now. The National Investment Board one single window clearance for projects above Rs 1,000 crore is also expected to be up and running a few weeks from now. So, I think some of the pending reforms on power and coal will be very closely watched by the market for it to actually move up from the current levels and to reach 6,000 levels in the short to medium-term. Q: You also believe that the market has a base in and around 5,400 levels. If we do see a sell-off at every interval, what are the stock that you would recommend picking up at lower levels from the Nifty? A: On the largecap space, we have been advocating private sector banking for the last four-five months. In the pre-quarterly review, we had said that the NPA and the restructuring asset quality problem will continue to dog the performance of public sector banking space. It would be a story of contrasting halves where the private sector banks and the NBFCs would post results better than analyst expectations. On the largecap space, in banking, we continue to remain positive on Axis Bank and ICICI Bank. We are looking at a one-year target of around Rs 1,325 on Axis Bank and around Rs 1,200 on ICICI Bank. In the midcap space, we have been consistently advocating a look at Mahindra and Mahindra Financial Services, Yes Bank and Jammu and Kashmir Bank, although I must say that the J&K Bank has done exceedingly, since we have recommended it nearly two months back. So, we continue to be positive on M&M Financial Services and Yes Bank. _PAGEBREAK_ Q: How much more of an upside would you give Amara Raja because of the good earnings that it posted this time? A: We have consistently recommended Amara Raja over Exide, since the beginning of the calendar year. The stock has done exceedingly well. But we still feel there is some more upside left in the stock. We are looking at an upside of around 14-15 percent from the current levels in the medium-term. Fundamentally, analysts are expecting revenue growth of around 21 percent in the current financial year followed by around 15 percent in FY13-14. On the bottom-line front, as against 38 percent growth in FY13, we are expecting around 21 percent growth continuing in FY13-14. So, with an extremely high RoE of around 31 percent, in the current year, around 30 percent next year, even at the current valuations of around 12 times one-year forward, we still feel there is a scope for a bridging of the gap between Exide and Amara Raja. Hence, we are looking at an upside of around 15 percent from the current levels. Q: The interesting thing about the market is that even while the frontliners have been struggling, there is a new lease of life in the midcaps. Are you recommending any? A: In addition to the banking midcap names, which we discussed and Amara Raja, on the pharmaceuticals front, our analyst is extremely positive on Torrent Pharmaceuticals. We are expecting a decent 24-25 percent upside in the medium-term level. The story is essentially of around 20 percent growth in earnings in the current and around 30 percent in the next financial year with a bottom-line of around 25 percent CAGR in the current and next financial year. The company has an extremely strong RoE of around 30 percent. So, there is a potential for narrowing of discounting between in the frontliners like Dr. Reddy’s Laboratories, which also we are recommending, Sun Pharmaceuticals and Torrnet Pharma. I think Torrent Pharma is something we are recommending quite strongly. In the midcap IT space, NIIT Technologies and Persistent Systems are two stocks that we are looking at with an upside of around 12 percent for Persistent and around 20 percent for NIIT Technologies. On the largecap space, in addition to ICICI Bank, Axis Bank and Dr. Reddy’s, we continue to be positive on Ranbaxy in the medium to long-term. On the IT side, Wipro has been a new addition. Our analyst feels that there is a scope for rerating and the company has got its strategy, which was struggling for a past few quarters, on an even keel. One can expect an upside in Wipro to around Rs 440 levels in one-year period.