Here are Ajay Bodke's top trading ideas

Watch the interview of Ajay Bodke of Prabhudas Lilladher with Latha Venkatesh, Anuj Singhal & Sonia Shenoy on CNBC-TV18, in which he shared his readings and outlook on market and specific stocks.Below is the verbatim transcript of Ajay Bodke’s interview to Latha Venkatesh, Anuj Singhal and Sonia Shenoy on CNBC-TV18.Sonia: Lots of stocks to talk about so first let me start off with some of the biggest movers of last week. State Bank of India (SBI) was clearly the stock everyone spoke about since it came out of the woodworks post its numbers and the merger of the associate banks. How would you approach that stock now? A: We are positive on SBI. Post results we have upgraded the target price from Rs 240 to Rs 300. We believe that as we go forward, the provisioning levels will come down quite significantly and the merger of associate banks would add a lot of heft. With the scale that SBI would gain over the competition, I think that makes us believe that SBI should form part of the core portfolio of investors. We are very constructive and positive on SBI.Anuj: Is that an SBI specific call or do you think even Bank of Baroda (BoB), Punjab National Bank (PNB) and others should also rally, some of them have, SBI of course has been the leader? A: I think we have to selective out there and not get carried away because all the names have moved up very sharply. However, in my opinion, SBI and BoB stand a distinct from the other pack in the PSU banks. If you look at the capitalisation levels in the other PSU banks, they are still quite weak. Also, I think the scale is simply not there. So, as the capitalisation requirements go up because of Basel III as well as growth imperatives over the next couple of years, I think there will be an erosion of market share that these banks will face unless the government is giving a signal by first going in for consolidation of associate banks of SBI and merging them with SBI and maybe it is a precursor of a large big bang consolidation in the public sector banking space. If that is the call investors were to take where emergence of three or four large behemoths is what the government is looking at on public sector banking space, then there is certainly money to be made there. However, fundamentally if you look at the provisioning levels that these banks will have to endure over the next couple of quarters, I would still be wary into jumping into some of these names which already have moved up very sharply.Latha: I had a larger question on midcaps. This has been a great midcap rally especially in the past eight weeks or so. However, there are some of the favoured midcaps which actually have underperformed for instance Ashok Leyland, to some extent even Bata India or Jet Airways. Where will you look for value, in your comments on these stocks and where else would you look for value in midcaps? A: I think on the Ashok Leyland case, the stock was a darling for investors for nearly year or year and a half prior to certain downgrades that came from slew of brokerages because one is clearly seeing a deceleration in the commercial vehicle numbers. Look at the medium commercial vehicles (MCV) and heavy commercial vehicle space (HCV) space, I think on a month-on-month (MoM) basis there is a clear trend of deceleration and hence the caution that people have whether the valuations have run ahead of the fair valuation in case of Ashok Leyland. In case of Jet Airways and as also in case of SpiceJet, I think the fears are that both the companies are operating at optimum capacity utilisation. They also have pricing power with them, so, what next? I think it will basically entail adding new capacities and which will entail capital expenditure. So, in both these cases the market seems to be taking a view that almost all the positives have been priced in and now for further upside, there are certain costs that the franchises will have to involve and hence the caution.Sonia: I wanted your views on how to approach Infosys, is this a great time to be buying into the stock as a long-term investor or is this a phase which may see lower levels on Infosys and you will get perhaps better opportunities to buy over the next few months? A: I think I would be positive on Infosys at current levels although I don’t see an immediate upside. I think the fear in the section of the market is that after having seen a cut in the guidance whether the company again would sort of come ahead and cut the guidance further. However, I feel that the company should be able to maintain the guidance that it gave last quarter. If you are taking a 12-15 month call, then it offers a great value for investors. We still believe that the strategy that Vishal Sikka has enunciated in terms of moving the company towards automation and artificial intelligence and some of the higher value added work, I think one needs to give him some more time to see the results. Sonia: Do you track Welspun India by any chance and have you followed the news flow that one of its biggest clients, Target has decided to end business because of that cotton issue? A: We don’t track the company but I am following the news flow. I think it is the second largest client for I believe Welspun India. The management is holding a conference call today morning, and subsequently the market will take a call about what exactly the managements version on the allegation that has been leveled by Target. Latha: Any further thoughts on any of the stocks in the news. You said you don’t like media but NBFCs, any other stocks? A: In the midcap space, Glenmark Pharma and Hexaware Technologies are two stocks I believe investors should look at with a medium-term perspective. In Glenmark in particular, I think there is a very important approval expected of Zetia sometime in December of the current calendar year which would be a blockbuster for them. The company is very strongly placed in dermatology space, 25-30 Abbreviated New Drug Application (ANDA) fillings they have done and both current year and next financial year, one should see a slew of approvals coming their way. So, I think this one stock has underperformed because of the problems that the company faced along with many of the pharmaceutical companies in case of Latin American currency plunging and the receivables getting impacted. However, that phase we believe is behind us. At the emerging markets as a total percentage of sales has come down from 35 percent to around 26 percent this year and should come down progressively to around 17 percent. The markets the company will focus on essentially will be the US markets, the Indian markets and the API business. The company has got injection of funds from IFC Washington recently which will be used to repay debt and the money that the company will make from the exclusivity for Zetia also will be used to pare down debt. So, the company is fundamentally strongly poised for a very sharp up move if you take a two to three year perspective.  The other stock that I am positive on is Hexaware Technologies. The June quarter numbers were very strong. The company guided for stronger September and December quarter numbers and the price also has come off quite sharply from Rs 270 to Rs 215 because of company’s not doing so well in last quarter. However, those apprehensions are behind us now and I believe that whenever interest comes back into midcap IT space, this is one company which is trading at a very attractive valuations. It is trading at just 13.7 times FY18 earnings and 15.3 times FY17 earnings with a strong return on equity (ROE) of around 29 percent and return on capital of (ROC) 28.7 percent. So, this is one company which one could look at.