India may soon lose out to South Korea and Taiwan in market-cap if the current trend sustains. Buoyed by the artificial intelligence (AI) boom, South Korea’s market value has surged 190 per cent to $4.59 trillion in the last one year, while Taiwan increased nearly 90 per cent to $4.67 trillion as against India’s market capitalisation of $5.02 trillion. The Indian market has been on a downward-to-sideways movement in the last couple of years as foreign investors’ risk-off sentiment has weighed down its equity market.
After pulling out nearly ₹1.80 lakh crore in FY26, FII selling continued with more intensity, as they sold over ₹75,000-crore worth shares in just 35 days of FY27. FIIs’ share declined to a 14-year low of 16.13 per cent, revealed a recent primeinfobase.com data.
In a recent report, JP Morgan while downgrading India’s weight to Neutral said large-cap index (Sensex and Nifty) has minimal AI, datacentre and semiconductor representation relative to the US, Korea, China and Taiwan.
Ambit’s bold call
In fact, in 2015, Ambit Capital had predicted that the big guns of the Sensex such as Reliance Industries, SBI, ONGC, Bharti Airtel, HDFC, Tata Steel and L&T may retire from the benchmark index altogether within the next 10 years.
Ambit Capital, betting on the then new government led by Prime Minister Narendra Modi, had predicted a massive overhaul in the way business is done in India so dramatically that a whole new generation of companies will graduate to the main index, while 15 of the current constituents would be dropped.
Index rebalancing
Market indices undergo periodic rebalancing to maintain their accuracy and relevance in a changing market landscape. In studying the churn in the Sensex over 10-year windows, Ambit Capital had found that the churn peaked at 67 per cent (or 20 replacements in the 30-stock index) in the years following the 1991 reforms (1993-95). It then fell to a low of 27 per cent (eight replacements) in 2004-14.
The report had pointed out that blue chips of the past such as Century Textiles, GSFC, Bombay Dyeing and Ballarpur Industries went out of the index when industry was disrupted by the abolition of the Licence Raj.
However, the big and bold call of Ambit Capital is yet to fructify, as none of the new-age companies is able to challenge them with a scale. While India might have missed the AI bus, it’s still not too late. Actually, old-economy companies, especially in Defence, energy, automobile and oil sectors, are adopting both AI and robots to stay relavent in the competitive world.
UPI revolution
Revolution is happening in fintech too. India’s Unified Payments Interface (UPI) stands as a global exemple of digital innovation, catalysing the country’s transformation into a digital-first economy. The listing of National Payments Corporation of India, which facilitates UPI, could help new-age companies featuring in the index and hence more traction for Indian stocks. Indigenously-built Sarvam.AI could be the other company which we can be proud of.
However, we need more such companies that are both innovative and have scale to take on global giants, especially in the fields of semiconductor, green hydrogen, renewable energy, electric vehicles, data centres, aerospace and biotechnology. At the same time, we should also be proud of old-economy companies, major job creators, that are managing to stay at the top. If they excel in their respective fields, taking on the mighty ones with clear vision, good days are ahead for Indian stock investors.
Published on May 8, 2026