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Indian home loan market to double; Decline in alcohol prices in Punjab; Difficulties in switching from fossil & EPFO investment limit increase to 25%

This week we cover Indian home loan market to double in 5 years, Why Punjab reduced alcohol prices, Difficulties in switching to EV’s/renewable energy easily and EPFO investment to increase to 25%; followed by what’s trending in markets and curated good reads .

1. Indian home loan market to double in 5 years💯

Deepak Parekh has been this optimistic about the home loan market in India & its exponential growth trajectory. He expects this market to double & reach $600Bn in the next 5 years☝🏻

Today, a mortgage to GDP ratio is merely 11% and should go to ~20%, considering the average range of other Asian economies, which hovers between the range of 20-30%. 

It will be driven by a combination of many factors such as increasing aspiration to own a house, developers getting more disciplined and digitalization making the processes so simple that home loan approval can be provided within 2 minutes. 

This message from the master himself gives us a good direction on the upcoming opportunities in this sector✨  

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2. Why Punjab reduced alcohol prices?

Punjab government rolled out this year’s excise policy, in which they are planning to make the liquor 35-60% cheaper. The idea behind this initiative is to stop the smuggling of alcohol from nearby states (Chandigarh, Haryana) to Punjab. 


After this step, we can expect the state’s alcohol revenue to increase by ~40% compared to last fiscal and this is also positive for companies selling alcohol in Punjab. This is the reason the share price of liquor stocks- Radico Khaitan and United spirits increase on Thursday after the announcement.

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3. Can India really switch to EV’s/renewable energy easily?

Majority in the market are optimistic about EV-Renewable themes but here’s the another side of it..

India is also one of many countries to set a goal of becoming a carbon-free country by 2070 

But we still generate 50%+ of total electricity from coal (major source of CO2 emission). This explains India being the 3rd largest country with carbon emissions. 

India’s coal consumption has doubled in the last decade😱…On the other hand, China also has a goal of getting carbon neutral by 2060 and already their coal demand has flattened.

Similarly, to achieve the goal, even India will anyhow need electrification and renewable energy aggressively in the system (Importing to reduce production won’t make sense as it will just the shift in pressure from importing to the exporting country)

While electrification has its own issues such as safety, infrastructure, and high costs; one common global issue with renewables is its “Storage”🔻

Even the US & Europe are struggling with this issue as recently dozen of storage projects have been postponed/canceled due to storage & other supply chain issues. 

India on the top of adequate storage facilities, also needs efficient distribution & large international funds for setting up the proper infrastructure🚧. Not saying that the goal set by India is impossible but it definitely seems difficult. 

Bottom line: As investors, rather than getting excited about these themes straight away, we should consider these obstacles companies will face and then take an informed realistic decision. 

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4. EPFO investment limit in equities increased to 25%

After the recent decline in EPF rates to 8.1%, Employees provident funds organization (EPFO) is considering increasing its investment limit in equities to 25% of the incremental inflows compared to the earlier limit of 15%. This step will help to bridge the shortfall in returns due to declining in interest rates. 


This is huge because EPFO gets net inflows of Rs 600cr everyday😮and at the current limit, it used to invest ~Rs 1,800-2,000cr in ETFs. So if the limit is increased to 25%, EPFO could possibly infuse Rs 3,000cr into the stock market every month.

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5. What else is trendin’?🤙🏻

✔️ RBI again increased the interest rates by 50bps and the repo rate hits 4.9%. To understand how increases in interest rates helps in controlling inflation and which sectors will gain from this, click here.

✔️ RBI allows the linking of credit cards with UPI. To know more in detail about what this means, tap here

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6. Good reads 📚

6.1  Read this post to know the 2 common myths among investors.

6.2 Tiny thought on Boredom & Impatience by Farnam street 

6.3 A write-up on What we should remember about bear markets.  

See you next week. Until then, happy investing!

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