India’s stock market has slipped from fifth to seventh globally as foreign capital retreats, driven by a weak AI footprint. Investors dumped a net $26.4bn this year, with a record $2.3bn outflow on Monday, pushing the market value of Indian equities to a 10‑year low of 7.3 trillion rupees ($76bn).

Taiwan’s TSMC and South Korea’s Samsung Electronics and SK Hynix have surged, each reaching $5tn market caps and eclipsing Mumbai’s $4.82tn National Stock Exchange. Indian IT giants like Tata Consultancy Services and Infosys saw foreign stakes fall 36 % from $60bn to $38bn, as analysts warn AI could disrupt the country’s dominant services export sector.

With no presence in large‑language models or chipmaking, India lags behind peers that benefit from AI‑driven productivity. The nation’s heavy reliance on oil imports and recent oil‑price shocks have pressured the rupee to nearly 97 per dollar, eroding foreign returns. Until a domestic AI champion emerges, Indian equities may remain a peripheral play for global investors.

Despite short‑term weariness, some analysts see structural upside. Morgan Stanley notes India’s manufacturing base could absorb AI gains, boosting productivity where labor efficiency lags behind peers. Motilal Oswal’s Rajat Rajgarhia argues capital will return once the market exits its current “very exciting” phase, positioning India as a long‑term growth driver in a multipolar world.