As the Indian stock market continues to struggle for momentum, the country’s share in global market capitalisation is also declining, slipping to a multi-year low in May and highlighting sharp underperformance compared to several Asian peers that are scaling fresh record highs.
According to domestic brokerage firm Motilal Oswal, India’s share in global market capitalisation fell to 3% in May 2026, marking a 50-month low and down from 3.3% in February 2026. India still remains among the top 10 contributors to global market capitalisation, though at its peak in September 2024, the country’s share had touched 4.6%.
Investor sentiment toward Indian equities has weakened amid the country’s relatively lower exposure to AI-led investment opportunities and continued pressure from subdued earnings growth.
Persistent weakness in the rupee and elevated crude oil prices have also fuelled inflation concerns, prompting to remain net sellers for most of 2026 and withdraw billions of dollars from domestic equities.
Among major global markets, (+28%), Taiwan (+15%), Japan (+12%), MSCI EM (+9%), the US (+5%), Germany (+3%), and the UK (+0%) ended higher or flat on a month-on-month basis. In contrast, Indonesia (-12%), Brazil (-7%), India (-2%), and China (-1%) ended lower during the same period.
India drops to sixth place in global market capitalisation
In terms of global market capitalisation rankings, the US retained the largest share at 47.9% in May, followed by China at 9.2%. Japan and Hong Kong ranked next with shares of 5.2% and 4.4%, respectively. India, with a market capitalisation of $4.4 trillion, stood in sixth position globally, the report showed.
Global market capitalisation has risen by 28.3% (or USD 36.5 trillion) over the past 12 months, while India’s market capitalisation has declined by 5.6% during the same period.
The report further noted that Korea recorded the highest increase in market capitalisation at 168%, followed by Taiwan (101%), China (48%), the US (28%), Japan (24%), and Brazil (22%). Barring Indonesia and India, all major global markets witnessed an increase in market capitalisation over the last 12 months.
Meanwhile, the MSCI India Index has declined 11% over the past one year, sharply underperforming the MSCI Emerging Markets (EM) Index, which gained 51% during the same period. However, over the longer term, the MSCI India Index has still outperformed the MSCI EM Index by 12% over the last decade.
In valuation terms, the MSCI India Index is currently trading at a 17% premium to the MSCI EM Index, below its historical average premium of 73%, according to the report.
The underperformance in domestic equities has also dragged down India’s market-cap-to-GDP ratio to 115%, compared to 126% in 2025. The ratio has remained highly volatile in recent years, plunging to 57% of FY20 GDP in March 2020 from 80% in FY19, before rebounding sharply to 132% in FY24, the report added.
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