India falls to seventh in global market cap rankings as South Korea surges

India has slipped to seventh place globally by equity market capitalisation after South Korea overtook it, driven by strong gains in AI-linked semiconductor stocks.

The combined market value of companies listed on South Korea’s KOSPI, KOSDAQ and KONEX exchanges reached $5.01 trillion, surpassing the $4.85 trillion valuation of firms listed on India’s National Stock Exchange.

The decline marks India’s second drop in rankings within two weeks, after it was overtaken by Taiwan last month. According to Bernstein analysts Venugopal Garre and Nikhil Arela, “About 18 months ago, India’s equity market cap was roughly 3.5 times South Korea’s and ⁠more than twice Taiwan’s. Fast forward just five months into 2026 and that lead has evaporated.

Indian equities have come under pressure from weak earnings growth and sustained foreign outflows. The Nifty 50 and BSE Sensex have fallen 10.1% and 12.5%, respectively, in 2026, while the Nifty IT index has declined 19% amid a subdued earnings outlook and continued foreign selling.

Overseas investors have withdrawn $26.4 billion from Indian stocks this year, exceeding the previous annual record of $18.91 billion set in 2025. India’s weight in the MSCI Global Standard Index has also dropped to 12.3% from a peak of 21% in September 2024.

“It’s really a remarkable decline and a restructure of the whole investment environment for us because ⁠of, obviously, the rise of South Korea and Taiwan as well,” said Naomi Waistell, a fund manager at French asset manager Carmignac, which oversees 41 billion euros ($47.76 billion) in assets.

The divergence is most evident in technology-focused markets. Strong gains in South Korean chipmakers Samsung Electronics and SK Hynix have helped lift the KOSPI by 107% this year, while Taiwan’s benchmark index has risen 59%, supported by demand for AI-related stocks.

India, however, has struggled to capitalise on the AI investment boom. “AI is the defining theme and semiconductors are at its centre and within emerging markets, that story belongs ⁠to Taiwan and Korea, not India,” said Abhay Laijawala, managing director and India chief investment officer at Lighthouse Canton.

Laijawala added that India still offers a “picks-and-shovels” opportunity in the AI era through investments linked to electricity, cooling systems, physical infrastructure and data centres that support the broader AI ecosystem.