As of Tuesday, India’s mcap stood at $4.77 trillion, accounting for 2.9 per cent of the global mcap of $164 trillion.
At its peak, India accounted for 4.73 per cent of global market value.
While India remains the world’s fifth-largest equity market by mcap, Taiwan is poised to overtake it following a sharp 45 per cent rally so far this calendar year.
South Korea, whose market has surged 75 per cent, is also close behind with an mcap of $4.7 trillion.
India’s relatively-expensive valuations, higher vulnerability to global energy shocks, and the absence of large artificial intelligence (AI)-linked plays have weighed on investor sentiment and dulled the market’s appeal.
“For years, the India growth story was one of the cleanest in emerging markets,” Steven Holden, chief executive officer (CEO) and founder of Copley Fund Research, said in a LinkedIn post. This was driven by domestic demand, demographics and a globally competitive IT services sector, he said.
However, “since 2020, India’s re-rating priced in a lot of that optimism, probably too much.”
Holden said that emerging market value funds had already turned cautious on India due to elevated valuations, while aggressive growth funds — historically among the strongest buyers of Indian equities — have also started trimming exposure.
According to him, the current overweight position of aggressive growth funds in India is at a record low.
He added that concerns over the structural threat posed by AI to India’s IT sector, coupled with rupee weakness, oil price volatility and tariff-related uncertainty, have further complicated the investment case for India.
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