India Retakes Fifth Place in Global Stock Market Rankings from Taiwan

India once more surpassed Taiwan to claim the position of the fifth-biggest stock market globally. According to Bloomberg, its market capitalization stood at approximately $5.4 trillion, having gained around $640 billion since the end of October.

The advance was fueled by a weakening AI sector and lower crude oil costs. India had also taken the lead in June, only for Taiwan to regain it. The question now is whether this time is different, given Taiwan's recent recovery.

Foreign Capital Shifts from Chip Stocks to Indian Equities

On November 11, the Nifty 50 ended at 25,255.05 per Google Finance. That level was 13.6% higher than the close on October 8, which had been the lowest point of 2026. The index currently sits only 3.4% lower for the year.

Taiwan's equities headed in the opposite direction. The TAIEX dropped 20.3% between its October 6 high and its close on November 6.

Semiconductor stocks had been declining since early October amid concerns about AI expenditure. The decline accelerated following the US midterm elections on November 4, which created uncertainty around data center projects. Bloomberg noted that South Korea, another market heavily reliant on chips, fell to ninth place.

The recovery in Indian stocks was driven by foreign investors. According to NSDL, foreign portfolio investors (FPIs) have bought a net $6.42 billion in Indian equities in November to date. That offsets a large part of the $7.35 billion they offloaded in September and October.

Lower oil prices also contributed. EPFR's Cameron Brandt stated that cheaper crude boosted inflows into India-focused equity funds.

Could India Gain from an AI Bubble Burst?

Christopher Wood, a strategist at Jefferies, has described India as a reverse AI trade. He believes that Indian equities would perform relatively better if the AI trade unravels.

Recent warnings about a bubble have brought that perspective back into attention. Alan Waxman, CEO of Sixth Street, told Bloomberg on November 11 that the economics behind AI spending are still not well understood.

Timothy Moe, a Goldman Sachs strategist, told CNBC that markets with lower AI exposure, such as India, are likely to outperform relatively. In October, India's Finance Minister Nirmala Sitharaman made a similar argument. She stated that India would not suffer if the AI bubble burst because it never attracted that kind of investment.

Bernstein disagrees, pointing to high valuations in India.

"India is neither an AI beneficiary nor an anti-AI trade," it said.

According to NSDL, FPIs are still net sellers of $24.98 billion in Indian shares for 2026. A gradual shift away from chip stocks would probably continue to benefit India. However, a widespread crash would likely affect all emerging markets similarly.

On November 12, the TAIEX ended 8.5% above its November 6 trough, although it fell 2.6% that day. Data on FPI flows over the coming weeks will indicate if November's purchases represent a permanent change.