Talking to ET Now, Rahul Shah, Motilal Oswal Financial Services , says Repco and Diwan Housing Finance among HFCs and ICICI and Axis among private banks are his pick.

Edited excerpts:

When it comes to Maruti, are the big gains over? Looking at the valuation and the value of the stock for the last couple of months, going forward, it appears the returns could be moderate from current levels. But, right now, Maruti is to auto what HDFC Bank is for the private sector bank. For the entire auto space, the returns could be moderate from the current levels. But, Maruti should be part of a portfolio. One should definitely hold onto it yes but aggressive players should not expect any high returns from here and returns definitely could be moderate from the current levels.

Historically whenever some of these stocks have gone higher that has coincided with a short-term market peak, typically institutional investors do not buy these stocks. These are dominated by ultra HNI, HNI and now even retail? I agree with you. Whenever we have seen such kind of stocks building up interest in the short term the purpose of the mid-cap stocks get defeated. I think one should be very careful while getting into these stocks or maybe I would advise stay away from such kind of stocks.

What is your view on Eicher and between Maruti and Eicher, which is a better pick now? Both the stocks have the same kind of momentum play. If you ask me, the returns in Eicher as well as Maruti would be moderate. It is same for both, only one has two-wheelers focus and one is in four-wheelers. If you are expecting 15-20% return in a year's time and this kind of market, then both should be a part of your portfolio.

What are your top ideas right now? What are you telling your clients to buy or even sell for that matter? The ideas remain the same. We have discussed them a couple of times on your shows. We have been talking of the Housing Finance Companies (HFCs) for quite some time. Maybe, in that space we have changed a few stocks here and there because of the valuation. Last time, we were discussing Repco Home Finance, the current corrections and I think the NPA cycle is at peak in that stock and it is available at a reasonable valuation and 2.5 times forward.

Repco is what one stock we have been recommending to our clients and it looks still interesting from current levels. That is our top idea. Second, Dewan Housing Finance is another stock that we like in the same space. In private sector banks, ICICI and Axis are two stocks we have been recommending from the current levels.