India Overtakes Taiwan to Become World’s 5th Largest Stock Market Again

India has overtaken Taiwan to become the world’s fifth-largest stock market again. Its total value reached about $5.4 trillion after adding roughly $640 billion since late October, Bloomberg data shows.

A faltering artificial intelligence (AI) trade and a slide in oil prices drove the gain. Yet India reclaimed the spot in June too, before Taiwan pulled ahead again. Will it hold this time, with Taiwan already rebounding?

Foreign Money Trades Chip Stocks for Indian Shares

The Nifty 50 closed at 25,255.05 on November 11, according to Google Finance. That is 13.6% above its October 8 close, the year’s low. The stock index is now just down 3.4% this year.

Taiwan’s market moved the other way. The TAIEX fell 20.3% from its October 6 peak to its November 6 close.

Chip stocks had been sliding since early October on worries about AI spending. The selloff deepened after the November 4 US midterms raised doubts over data center construction. South Korea, another chip-heavy market, has slipped to ninth place, Bloomberg reported.

Foreign investors led the Indian stock market’s recovery. Foreign portfolio investors (FPIs) bought a net $6.42 billion of Indian equities in November so far, per NSDL. That recovers most of the $7.35 billion they sold in September and October.

Cheaper oil helped too. EPFR’s Cameron Brandt said lower oil prices improved flows into dedicated India equity funds.

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Would India Win if the AI Bubble Bursts?

Jefferies strategist Christopher Wood has called India a reverse AI trade. In his view, Indian stocks should outperform if the AI trade unwinds.

Recent bubble warnings have put that view back in focus. Sixth Street CEO Alan Waxman told Bloomberg on November 11 that AI’s spending economics remain poorly understood.

Goldman Sachs strategist Timothy Moe told CNBC that markets less exposed to AI, like India, should see relative outperformance. India’s Finance Minister Nirmala Sitharaman made a related point in October. She said India would not be hurt if the AI bubble burst, since it never drew such investment.

Bernstein rejects that view, citing expensive Indian valuations.

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

FPIs remain net sellers of $24.98 billion in Indian shares for 2026, per NSDL. A gradual rotation out of chip stocks would likely keep favoring India. A broad crash, however, would likely hit emerging markets together.

Meanwhile, the TAIEX closed November 12 up 8.5% from its November 6 low, despite a 2.6% daily drop. The next few weeks of FPI data should show whether November’s buying marks a lasting shift.

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