South Korea has overtaken India to become the world’s sixth-largest stock market by market capitalisation, driven by a sharp rally in semiconductor stocks linked to the global artificial intelligence (AI) boom.

The total market value of companies listed in South Korea has surged 86% this year to reach $5 trillion. In contrast, the market capitalisation of Indian-listed firms has declined to about $4.8 trillion, pushing India down another spot in the global rankings, as per the exchange data.

The latest development comes just days after Taiwan moved ahead of India in global stock market rankings, highlighting the growing influence of economies at the centre of the AI supply chain.

AI boom fuels South Korea’s rise

South Korea’s rally has been led by chipmakers Samsung Electronics and SK Hynix, which have benefited from soaring demand for memory chips used in AI applications and data centres.

The strong performance of the two technology giants has helped lift South Korea’s benchmark Kospi index to record levels and significantly improved investor sentiment toward the country’s equity market.

South Korea has overtaken several major markets, including those of Canada, Germany, the United Kingdom and France this year.

India faces headwinds

While South Korea and Taiwan have benefited from AI-related investments, Indian equities have struggled amid foreign investor selling, a weakening rupee, elevated energy prices and slower corporate earnings growth.

Global funds have sold around $26 billion worth of Indian equities this year, according to Bloomberg. Benchmark Indian stock indices have fallen about 11% in 2026 and are on track for their first annual decline in nearly a decade.

Despite the stock market setback, India remains a much larger economy. According to International Monetary Fund estimates, India’s economy is expected to reach about $4.15 trillion this year, more than double South Korea’s projected $1.93 trillion GDP.

Market experts, however, remain positive on India’s long-term growth prospects, citing its strong consumption-driven economy. For now, global investors appear to be favouring markets that are directly benefiting from the rapid expansion of AI infrastructure, helping South Korea and Taiwan move ahead of India in global equity market rankings.