South Korea Surpasses India As 6th Largest Stock Market, AI Boom Lifts Valuations

India has slipped to the seventh position among the world's largest stock markets after South Korea overtook it in terms of total market capitalisation.

Just a week ago, India had lost its fifth position to Taiwan. With South Korea now moving ahead, India has dropped two places in global rankings within a short span.

According to Bloomberg data, the combined market value of companies listed in South Korea has risen 86 percent this year to reach nearly $5 trillion. In comparison, India's market capitalisation has fallen to around $4.8 trillion.

AI Boom Drives South Korean Rally

The sharp rally in South Korean equities has been largely driven by the country's semiconductor giants.

Shares of Samsung Electronics and SK Hynix have surged as both companies benefit from growing global demand for artificial intelligence infrastructure and memory chips.

The strong performance of these technology leaders has helped the Kospi index gain more than 100 percent in 2026. South Korea has also overtaken several major markets, including Canada, Germany, the United Kingdom and France.

Semiconductor Stocks Power Taiwan's Rise

India's decline in rankings follows a similar move by Taiwan last week.

Taiwan climbed to the fifth position globally, largely due to the remarkable rise of Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest contract chipmaker.

TSMC now accounts for about 42 percent of Taiwan's benchmark stock index. Its shares have gained 46 percent this year as investors continue to pour money into companies linked to artificial intelligence and advanced chip manufacturing.

Challenges Facing Indian Markets

While technology-heavy markets have benefited from the AI boom, Indian equities have faced several headwinds.

A weakening rupee, continued foreign investor selling and the relatively limited presence of AI-focused semiconductor companies have weighed on market performance.

These factors have reduced investor enthusiasm at a time when global capital is increasingly flowing into technology and semiconductor-related stocks.

Despite losing ground in stock market rankings, India remains significantly larger than South Korea in terms of economic size.

According to International Monetary Fund estimates, India's gross domestic product stands at approximately $4.15 trillion, compared with South Korea's GDP of $1.93 trillion.

India also continues to be one of the fastest-growing major economies globally, supported by strong domestic demand and economic expansion.