Days after , another Asian economy has now moved ahead of India.
South Korea has overtaken India to become the world’s sixth-largest stock market, powered by a massive rally in artificial intelligence-linked semiconductor companies.
Data compiled by Bloomberg shows that the total market capitalisation of South Korean-listed companies has surged 86% this year to reach $5 trillion. In comparison, India’s market value has fallen to $4.8 trillion.
The development marks another setback for Dalal Street, which have been struggling with foreign investor outflows, a weakening rupee, rising energy costs and slowing earnings growth.
The contrast is striking because India’s economy remains more than twice the size of South Korea’s.
According to International Monetary Fund estimates cited by Bloomberg, India’s economy is expected to be worth around $4.15 trillion this year, compared to South Korea’s $1.93 trillion economy.
Yet when it comes to stock market value, South Korea has now moved ahead.
The biggest reason behind South Korea’s jump in the rankings is the global artificial intelligence boom.
Bloomberg reported that technology giants Samsung Electronics and SK Hynix have become the driving force behind the country’s stock market rally.
The two companies, both major suppliers of memory chips used in AI systems and data centres, have recently joined the $1 trillion market-cap club.
Their sharp rise has helped push South Korea’s benchmark Kospi index to record levels and transformed investor sentiment towards the country.
South Korea’s ascent follows a similar trend seen in Taiwan, where chip giant Taiwan Semiconductor Manufacturing Company (TSMC) helped lift the island nation’s stock market above India’s just days ago.
Together, Taiwan and South Korea have become two of the biggest beneficiaries of the global race to build artificial intelligence infrastructure.
Gerald Gan, Chief Investment Officer at Reed Capital Partners, told Bloomberg that the rally highlights the growing importance of South Korean technology companies in the next phase of technological innovation.
“It also reflects a broader shift in global capital flows toward major Asian economies, which were once overshadowed by Western markets but are now playing an increasingly prominent role in shaping the future of technology and growth,” he said.
Bloomberg reported that South Korea’s stock market has also benefited from domestic reforms.
President Lee Jae Myung’s push for corporate governance reforms has coincided with the AI investment boom, creating a powerful combination for investors.
The Kospi index has already crossed Lee’s earlier target of 5,000 points, and some Wall Street analysts are now projecting even higher levels.
However, some market experts have warned that South Korea’s rally remains heavily dependent on a handful of technology companies.
Ross McGarry, Senior Investment Analyst at Asset Value Investors, told Bloomberg that Samsung and SK Hynix have done most of the heavy lifting.
“This year’s rally has been heavily carried by the memory cycle,” he said.
According to McGarry, the long-term success of South Korea’s market will depend on whether the country can continue with genuine corporate governance reforms and broaden investor confidence beyond a few large technology firms.
While South Korea and Taiwan have benefited from AI-linked enthusiasm, India’s stock market has struggled to find a similar theme.
Bloomberg noted that India lacks major listed companies directly connected to the global AI infrastructure buildout.
The country has also been dealing with a combination of challenges.
A weakening rupee, higher oil prices, inflation concerns and record foreign investor selling have weighed on sentiment.
Global funds have sold around $26 billion worth of Indian equities this year, according to Bloomberg.
India’s benchmark stock indices are down around 11% in 2026 and are heading for their first annual decline after nearly a decade of gains.
Gan told Bloomberg that the India growth story has lost some momentum in investors’ minds due to domestic and external challenges.
He also pointed to infrastructure gaps that continue to affect India’s ambitions in advanced manufacturing sectors.
Despite the recent setback in market rankings, many investors remain optimistic about India’s long-term prospects.
Stanley Tang, Senior Portfolio Manager at Sumitomo Mitsui DS Asset Management, told Bloomberg that one of the key investment arguments for India has always been the country’s consumption story.
According to IMF estimates, India’s GDP per capita has reached around $2,810 this year.
Tang said the long-term investment case remains intact, although inflation is creating short-term pressure.
“Long-term thesis still holds, but inflation is creating a near-term headwind,” he said.
For now, however, the message from global markets is clear.
The biggest winners in 2026 are countries sitting at the heart of the AI supply chain. While India continues to be one of the world’s fastest-growing major economies, investors are currently rewarding markets that are directly powering the artificial intelligence revolution.
That shift has now helped South Korea join Taiwan in overtaking India in the global stock market rankings.