Welcome to Samosa Capital’s evening briefing — the best way to stay up-to-date on India’s financial markets. Here’s what’s in today’s newsletter:

• Microsoft’s $3 billion bet,

• Luxury units are selling fast,

• GDP expectations get dampened (again).

• Finally, we’ll close with Gupshup, a round-up of the most important headlines.

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—Shreyas, [email protected]

Market Update

Markets were mostly flat today at 0.40 percent after rebounding from heavier losses yesterday. Inflows were mostly into blue chips, while IT stocks slid slightly.

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Microsoft’s $3 Billion Bet

Microsoft has announced a $3 billion investment to bolster its cloud computing and AI infrastructure in India over the next two years, CEO Satya Nadella unveiled the plan during an event in Bangalore, emphasizing India’s critical role in driving Microsoft’s growth and the global AI revolution.  

Nadella highlighted the country’s "exciting" diffusion rate of AI, signaling its potential as a global AI epicenter. Microsoft’s expansion comes amid growing competition, with tech leaders like Nvidia’s Jensen Huang and AMD’s Lisa Su recently spotlighting India’s AI market.  

Microsoft wants more people power: Beyond infrastructure, Microsoft aims to empower India’s workforce. The company plans to train 10 million Indians in AI skills by 2030, reflecting its vision of making India an AI-first nation.

This $3 billion investment builds on Microsoft’s ongoing initiatives in India, where it already employs over 23,000 people across cities like Bangalore and Hyderabad. Last week, the company announced a broader $80 billion global data center expansion, underlining its commitment to providing the infrastructure businesses need to deploy advanced AI tools and systems. 

Luxury Living

Housing sales across eight major Indian cities, including Mumbai and Delhi, surpassed 350,000 units in 2024, marking the highest level in 12 years, according to Knight Frank. The residential real estate market grew by 7 percent year-over-year, while office leasing reached a record 71.9 million square feet, up 21 percent.

Residential Real Estate Trends

• Mumbai retained its position as the largest residential market, contributing 27 percent of total sales. However, Bengaluru had the highest appreciation among major cities, rising by 12 percent.

• Sales of high-luxury units priced between $233,000 and $582,000 (₹20 million and ₹50 million) surged 85 percent.

• Mid-Range Sluggishness: Sales of mid-luxury units priced up to $116,500 (₹10 million) remained flat or declined.

What about the rest of India? In 2024, 459,650 houses were sold across India’s seven largest cities, a decline from the 476,530 in the previous year. Kolkata experienced the steepest drop in sales, followed by Chennai. Meanwhile, sales rose by 1% in the Mumbai Metropolitan Region (MMR) and by 2% in Bengaluru. (There is little reliable data about home sales in India’s smaller cities and rural areas.)

BTW: The average income of an urban salaried worker (only 21.5 percent of India’s workforce is salaried, and urban salaried workers are the highest earning type of worker) is $3082 (₹262,000). It would take the average urban salaried worker 75 years of income to pay off the cheapest luxury unit priced at $233,000.

Moral of the story: Rising sales for luxury homes, while the remainder of the housing market remains flat, reflects that India’s growth is unevenly distributed.

More companies, more offices: The office leasing segment also hit new highs, with Bengaluru leading the way, accounting for 25 percent of transactions. The increase underscores the city’s growing status as India’s top technology and business hub.

GDP Expectations Get Worse

India’s government has revised its economic growth projection for FY2025 (fiscal year ending March 2025) to 6.4 percent, down from 8.2 percent in the previous year, marking the slowest expansion since the pandemic. While the forecast aligns with economist expectations, it underscores the challenges Prime Minister Narendra Modi faces in achieving ambitious development and job creation goals.  

The bad news:  The revised projection implies a robust 6.8 percent growth in the second half of FY2025, which some economists believe is optimistic. Consumers have curtailed spending due to wage stagnation and inflation spikes, while household and business spending — accounting for 60 percent of GDP — remains subdued. Government expenditure has also fallen short of targets, partly due to prolonged election cycles.  

The good news: Private consumption is projected to grow at 7.3 percent, up from 4 percent last year, bolstered by strong rural demand following a favorable monsoon. Government spending is expected to rise by 4.1 percent, compared to 2.5 percent in FY2024, reflecting optimism about increased public investment in the coming months.  

Monetary and Fiscal Angles. With growth slowing, pressure is building on new Reserve Bank of India Governor Sanjay Malhotra to cut interest rates. His predecessor, Shaktikanta Das, maintained a restrictive stance for nearly two years despite calls for easing. Some economists now anticipate a rate cut as early as February to revive growth.

Gupshup

Macro

• Indian fuel demand hit a 7-month high at 20.7 million metric tons. Fuel consumption rose 2.1 percent y-o-y and up 1 percent m-o-m for gasoline. India is currently the third largest consumer and importer of oil.

• China to impose anti-dumping restrictions on cypermethrin from India. Cypermethrin is routinely used as an insecticide. It controls pests for cotton, vegetables, corn, and flowers, according to China’s commerce ministry.  

Equities

• Indian banks' profitability to moderate in FY26, hurt by higher delinquencies in unsecured loans. The missed payments are coming from younger workers or people with semi-formal incomes who took loans during the pandemic. Banks’ credit growth has also fallen off, though mostly due to base effects.

• Chipmaker NXP is projected to generate 10% of its total revenue from India by 2030, driven by the country’s expanding automotive and industrial sectors. Currently, NXP does not report India-specific revenue, but the automotive segment is expected to thrive as the company faces challenges in the Chinese car market. China is ramping up production of older chipsets and contending with European tariffs, further positioning India as a key growth market for NXP.

Alts

• Husk Power Systems, a mini-grid firm, is raising $400 million (₹34 billion) and plans to IPO later. The company operates solar mini-grids in Nigeria and India, with plans to expand in Congo through the mixed debt and equity raise.

Policy

• U.S. National Security Advisor Jake Sullivan says progress is being made on nuclear cooperation with India. Sullivan’s last assignment will be to scrap regulations that prevent American and Indian authorities from working together. For India, cooperation allows for nuclear energy proliferation to reduce reliance on carbon dioxide-emitting sources. 

• India's antitrust authority has determined that French liquor giant Pernod Ricard pressured retailers to aggressively promote its products. Competitors accused Pernod of collusion in 2022, leading to a recent raid on the company. Regulators uncovered evidence of Pernod conspiring with retailers to exclude a Radico whiskey brand from their shelves. Additionally, Pernod is challenging a $250 million (₹21.5 billion) tax claim in India over the alleged undervaluation of imports.

See you Wednesday.

Written by Yash Tibrewal. Edited by Shreyas Sinha.

Disclaimer: This is not financial advice or recommendation for any investment. The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.