TSMC Rally Pushes Taiwan Close to India’s 5th-Largest Market

Taiwan’s aggregate market capitalization reached $4.89 trillion on Tuesday, compared with $4.92 trillion for companies listed on India’s National Stock Exchange, according to exchange data. Shares of Taiwan Semiconductor Manufacturing Co. have risen more than 44% so far in 2026, lifting the Taiwan Weighted Index about 50.3% year-to-date.

TSMC now accounts for roughly 42% of Taiwan’s benchmark index by market value, concentrating gains in a small group of semiconductor firms. Foreign inflows into Taiwan have totaled nearly $25 billion in 2026, while foreign portfolio investors have sold about $24.18 billion of Indian equities this year.

India’s benchmark indexes have fallen this year, with the Nifty 50 down about 8.5% and the BSE Sensex down about 10.8%. Annual earnings growth has been weak and Indian markets have limited exposure to companies tied to artificial intelligence, factors cited by market participants.

Copley Fund Research wrote in its May report: ‘India has moved from being the darling of emerging markets to the runt of the litter among Asia’s Big Four.’ The firm noted average India weights in the funds it tracks fell to 9.94%, the first time below 10% since January 2021, down from a 17.47% peak in August 2024.

India’s share of the MSCI Global Standard Index has declined to 12.3% from a 21% peak in September 2024, reducing automatic inflows from passive funds that track the benchmark.

Market observers cited geopolitical and domestic risks as drivers of recent outflows. Bhandari pointed to oil-price volatility, India’s reliance on imported energy, tensions with Pakistan, uncertainty around U.S. tariff policy and the risk of erratic monsoons. Tuhin Kanta Pandey noted Taiwan’s concentration around a handful of large companies has helped attract foreign investment into semiconductor and AI-related names.

The United States, China, Japan and Hong Kong remain the four largest markets by capitalization. The contest for the fifth spot reflects recent shifts in fund flows and index positioning as some passive funds rebalance in response to changing index weights.