Indian stock market slips behind South Korea to 7th spot

A week after slipping behind Taiwan, the Indian stock market has now slipped behind South Korea to the seventh spot in the list of the biggest markets in the world in terms of market capitalisation. This steep decline comes as the Indian markets battle against persistent foreign outflows, lack of artificial intelligence (AI) plays, geopolitical uncertainties and lagging earnings growth. The total market cap of the South Korean stock market has climbed 86% this year to breach the $5 trillion mark, while India’s market cap is at around $4.8 trillion, data compiled by Bloomberg showed. Taiwan’s market cap which stands at around $5.2 trillion overtook India last week. The US, Japan, China and Hong Kong make the top four. Both the South Korean and Taiwanese markets have massively benefited from global investors chasing AI-related opportunities, a sector earmarked to be the biggest growth driver going ahead. Meanwhile, Indian corporates have been known for underinvesting in AI-related research and development despite sitting on significant cash reserves, leaving the market behind the AI curve. Also Read | AI fears, heady valuations: Why foreign investors are selling off Indian IT stocks This AI boom has led the Taiwanese and South Korean markets to rally 69-109% so far this year, with a majority of their benchmark indices being dominated by a handful of AI stocks. Chipmakers SK Hynix and Samsung each have a market cap of over $1 trillion and together account for almost half of South Korea’s Kospi index. These stocks have more than tripled so far. TSMC, the world’s largest semiconductor manufacturer, has a market cap of over $2 trillion and makes up over 40% of Taiwan’s TAIEX index. Its stock price has already jumped 1.5 times so far this year. In fact, at 14.21%, TSMC on its own now has a greater weight in MSCI’s emerging markets index than India, underscoring the value investors are putting on AI-related opportunities. The US Nasdaq Composite index, which is the biggest tech index in the world, has also risen by around 17% this year. Nvidia, which accounts for 10-12% of the index, has gained 20%. Other big AI and semiconductor names such as Intel, Micron, and AMD also surged 128-228%. Also Read | New IIP series: April industrial growth rises to 4.9% from 3.2% in March Meanwhile, the benchmark Sensex rose 0.52%, or 382 points, to 74,649.84 on Tuesday. The NSE Nifty index gained 0.43%, 101 points, at 23,483.55 on buying support. The Indian stock markets are down 10-12% this year, with traditional IT services companies taking a beating due to lack of innovation and focus on integrating existing AI models in their services. These firms, which include the likes of TCS, Infosys, and Wipro, have a weight of 8.48% on the NSE’s Nifty 50 index. The lack of AI-related opportunities, combined with the rupee falling to multiple lows against the dollar, has accelerated the flight of foreign capital from the Indian stock markets. Foreign institutional investors have dumped Indian equities worth $22.6 billion in the past three months, taking the total capital outflow to $26.4 billion so far in 2026, already surpassing the $18.9 billion seen in 2025.