Banking and financial services sector — which currently is under some stress — will be the key drivers of growth in the long-term. In a freewheeling discussion with Business Line , Mr Peeyoosh Chadda, Executive Vice-President, Edelweiss Asset Management, shared his views on the sectors that are likely to drive growth, the strategies to be adopted by retail investors and way forward for the country's mutual fund business.

Are retail investors in the country still shy of investing in the markets? What should be their strategy?

Retail investors are beginning to understand ways of tackling volatility in the market. They are in fact entering the market in a big way through the SIP (Systematic Investment Plan) route. This is reflected in the steady rise in SIPs. I feel that investors should come in through SIPs and stay for longer duration to get better returns.

Retail participation

India has a great growth story and our view is that every retail investor should participate in that growth. It is crucial that investors keep the faith in the India story. Discipline is the key to any investment. It is better not to react to short-term volatility as that can result in tremendous long-term damage to the investment health.

Investors should also look at equity in a big way as that will earn good returns in the long run. Fixed income is basically a painless lack of gain, in equities there is a slight risk but if you are invested for long-term then you are assured to get good returns.

Which are the sectors that are likely to drive growth?

A number of sectors are set to create considerable economic value. In particular, I will like to mention banking and financial services. This does seem a little depressed at the moment, but the sector is set to log tremendous growth in the years ahead.

What is your take on the infrastructure sector?

Infrastructure sector is facing some pressure. The demand for infrastructure in the country is high, but the quality of infrastructure is what needs to be looked into. Achieving a profitable growth is a little difficult for any company. Increasing top-line may not necessarily help make money for an investor. So we are bit cautious about the sector.

What according to you is the ideal distribution model to be adopted by an asset management company?

The existing distribution network — which is a combination of banking network, independent financial advisors and national distributor channel — is a very good model. The online channel will also pick up gradually in the days to come.

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