The underperformance of India’s equity market has started eroding its global standing. After Taiwan surpassed India as the fifth most valuable global market in terms of market capitalisation, the Indian stock market has now slipped below the South Korean market and now sits in seventh place.
The total market cap of Korea-listed companies has jumped to USD 5 trillion, while India’s has declined to USD 4.8 trillion, according to Bloomberg data. The change comes as the Korean stock market’s valuation has surged 85% this year, while the Indian market has seen capital erosion due to a host of factors.
The change also comes as global investors are favoring the AI trade, befitting companies such as Samsung and Taiwan Semiconductor Manufacturing Co (TSMC). Semiconductor giants Samsung Electronics Co. and SK Hynix Inc together account for a significant share of Korea’s Kospi index while TSMC accounts for 40-50% of Taiwan's market cap.
The AI and semiconductor companies have also lifted the overall equity market in their respective countries. South Korea's KOSPI index has advanced almost 100% in 2026 so far, while Taiwan's mainboard index is up 55%. Tech-heavy US benchmark Nasdaq is up 21% in the same period. In contrast, the Indian stock market benchmark - Nifty50- has declined more than 10% so far in 2026.
The latest shift places Taiwan as the world's fifth-largest equity market. The US remain the largest market, followed by China, Japan, Hong Kong and Taiwan.
The lack of a robust AI ecosystem is severely costing the Indian market and it has become one of the major reasons why foreign institutional investors (FII) are fleeing. Total FII selling up to 30th May 2026 so far in 2026 stood at massive Rs 224,932 crores (USD 23.6 billion).
India’s market has also taken a hit from crisis in West Asia. The energy shock, arising from steep surge in global crude oil and natural gas prices, has led to a downward revision of India’s GDP growth and an upward revision of inflation this financial year. Besides the rupee value has seen a significant decline and corporate earnings have been below street estimates.
