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India equity outflows hit $27.6 bn and indices slip over 10% while Taiwan’s market cap nears $5 tn and Korea’s Kospi 200 jumps 130% on AI gains.
India’s equity market has seen $27.6 billion of foreign sell‑offs since January, pushing its benchmark indices more than 10% into the red and ceding its rank to Taiwan and South Korea as AI‑driven firms lift those markets sharply [1].
| At a glance | |
|---|---|
| Foreign outflows (Jan‑Jun) | $27.6 bn |
| India index YTD change | –10% |
| Taiwan market cap (May 26) | ≈ $5 tn |
| Korea Kospi 200 YTD gain | +130% |
| MSCI India weight | 11% (down from ~20% in 2024) |
AI earnings upgrades at TSMC, Samsung and SK Hynix have sent Taiwan’s market cap to almost $5 trillion, overtaking India for the world’s fifth‑largest equity market on May 26 [1]. Within a week South Korea’s equity market also passed India, moving the country from sixth to seventh place. By contrast, India’s consumption‑focused story is faltering: households face higher inflation, a weaker rupee and slower quality‑job growth, which together are dampening domestic demand [1].
On a year‑to‑date basis the Kospi 200 is up more than 130% and Taiwan’s FTSE TWSE 50 up over 60%, while Indian benchmarks are the only Asian indices in negative territory, falling over 10% [1]. Indian equities trade at about 21 times forward earnings, roughly in line with Taiwan but far above South Korea’s nine‑times multiple, according to Alpine Macro data [1]. Nomura has cut consensus earnings estimates for 256 Indian firms by 4% for FY 2027, citing the Middle‑East conflict’s impact on earnings [1]. The MSCI index reflects the shift, with India’s weight falling to around 11% from a peak of nearly 20% in 2024 [1].
Analysts argue that India’s lack of a large‑scale AI play—no domestic semiconductor fabs and IT firms focused on services rather than capital‑intensive AI work—limits its appeal to foreign investors seeking AI exposure [1]. Yet some observers note that other markets without AI exposure, such as Brazil, are performing better, suggesting that high valuations and modest earnings growth are also key deterrents [1]. Automation and robotics are eroding the cost‑advantage of India’s low‑wage labor, while AI adoption raises longer‑term questions for the country’s IT sector [1].
Foreign investors are exiting India not solely because of an AI deficit but also due to elevated valuations, modest earnings upgrades and geopolitical headwinds. Whether the market can regain its former “best‑story” status will hinge on how quickly AI‑related capabilities develop and whether policy measures can revive domestic consumption.
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AI-assisted synthesis by the TrendWatcher Editorial Desk · sourced from 2 outlets · Jun 16, 2026 · How we report
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