South Korea has reportedly overtaken India to become the world’s sixth-largest stock market, powered by a surge in chip-heavyweights tied to the global artificial-intelligence boom.

The development, reported by Bloomberg on Tuesday, comes after Taiwan last week overtook India to become the fifth-largest stock market; Now India has lost its sixth position to South Korea.

Taiwan's market capitalisation stood at $4.95 trillion, slightly ahead of India's market capitalisation of $4.92 trillion last week.

Korea-listed companies’ total market capitalisation has surged about 86 per cent this year to around $5 trillion while India’s market capitalisation has slipped to roughly $4.8 trillion, per data cited by Bloomberg.

The surge in Korea’s stock market has been led by semiconductor giants Samsung Electronics and SK Hynix, both of which have joined the $1-trillion valuation club amid strong global demand for AI infrastructure.

The shift is considered by experts a testament to how global investors are increasingly moving towards AI-linked sectors, particularly Asia’s semiconductor hubs such as South Korea and Taiwan.

“Closing in on India is a remarkable milestone for a market that, not long ago, was setting Kospi 5,000 as an ambitious target,” Ross McGarry, senior investment analyst at Asset Value Investors, told Bloomberg.

Korea’s President Lee Jae Myung had earlier set a target of Kospi 5,000 after his push for corporate reform coincided with the emergence of AI as a dominant investment theme.

“The real test is whether Korea can sustain this re-rating through genuine corporate governance reform,” McGarry told Bloomberg.

Meanwhile, a weakening rupee, foreign investors' outflow, and a dearth of companies linked to the AI boom have led to a crash in India’s equity growth.

Higher energy costs have also fuelled inflation concerns, cited Bloomberg, accompanied by global funds selling about $26 billion of local equities this year. As a result, India’s stock benchmark has fallen around 11 per cent this year.

“The India growth story has increasingly lost momentum in investors’ minds as the country contends with mounting domestic and external political challenges,” Gerald Gan, chief investment officer at Reed Capital Partners, told Bloomberg

“At the same time, longstanding infrastructure deficiencies continue to undermine its ambitions in advanced manufacturing.”

Although Korea has risen above India in market value, India’s $4.15 trillion economy- one of the fastest-growing in the world- still far exceeds Korea’s $1.93 trillion GDF, according to IMF estimations.