India overtaken as South Korea, Taiwan ride AI wave
India's equity market has fallen to seventh globally, largely due to its absence in the AI investment boom, while East Asian markets with strong AI supply chains surged.
- India's drop in global market capitalization rankings.
- East Asian markets' surge driven by AI supply chain.
- Significant foreign investor outflows from Indian equities.
BENGALURU: The Indian equity market’s sudden drop to seventh in the global market cap rankings has sent shudders through Dalal Street, with AI singled out as a decisive factor.
But does blame lie solely with India’s lack of AI champions, or are there other factors behind the fall? That’s our main focus this week.
AI is to blame, but not AI alone
India’s equity market was overtaken by Taiwan and South Korea in quick succession, pushing what was once emerging Asia’s darling to seventh in the world by market capitalisation.
It’s no secret what has powered the rallies in those East Asian markets, which are home to a host of companies that are critical to the AI supply chain, including TSMC, Samsung Electronics and SK Hynix. Last week, both countries received Goldman Sachs.
India has been bypassed by the AI investment boom, with foreign investors instead pulling out almost $26.4 billion from local stocks so far in 2026, putting the country on course to far surpass the record $18.9 billion divestment of 2025.
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