The ten largest listed companies in India and China now command a smaller share of their total market capitalization compared to last year. This trend stems from a lack of dominant AI-focused winners, leaving these markets trailing behind tech-driven economies like Taiwan and South Korea. Investors are now watching how index concentration and traditional business models, such as IT services, respond to the global artificial intelligence boom.
What Happened
India and China are experiencing a notable shift in market structure as their largest listed companies hold a smaller share of total market capitalization than they did a year ago. In India, the top ten largest companies now account for approximately 19% of the total market capitalization, down from 22% a year earlier. A similar trend is visible in China. This decline in concentration is happening while global markets with strong exposure to the artificial intelligence supply chain, such as Taiwan and South Korea, have seen their benchmark indices surge due to the rise of specific AI-focused technology firms.
Why the AI Gap Matters
Market concentration is often driven by massive gains in a few dominant companies. In Taiwan and South Korea, the presence of major players deeply integrated into the global AI supply chain, such as Taiwan Semiconductor Manufacturing Co. (TSMC), SK Hynix Inc., and Samsung Electronics Co., has propelled their indices significantly higher.
Charu Chanana, chief investment strategist at Saxo Markets, noted that in tech-heavy markets, AI winners are driving index concentration higher. Conversely, in India, China, and Hong Kong, the concentration is falling because there is no single dominant company capturing the AI growth wave. For investors, this means that while indices in these regions may offer more diversification, they are currently missing the specific upside generated by global AI demand.
The IT Services Context in India
India’s primary benchmark, the Nifty 50, is heavily weighted toward established giants in financial services and traditional software services, including Reliance Industries, HDFC Bank, Tata Consultancy Services (TCS), and Infosys Ltd. While these companies provide market stability, they are primarily focused on traditional IT service delivery.
Some market observers have pointed to the risk that these traditional software models might face disruption or slower growth as AI changes how software is developed and maintained. Because these firms do not currently lead in AI hardware or specialized AI model development, they have not provided the same index-boosting effect seen in markets like Taiwan, where semiconductor production is a core part of the economic engine. According to reported data, the Nifty 50 has faced downward pressure this year, partly reflecting this broader structural lag.
Contrasting With China’s Approach
China’s market situation is more complex. While its largest firms are often diversified conglomerates, investors are increasingly shifting their attention toward companies with a clearer association with the AI sector, such as intelligent processor maker Cambricon Technologies Corp. and semiconductor foundry SMIC. Fabien Yip, a market analyst at IG International, observed that investors have been reallocating capital toward firms with a direct tie to AI, even as the overall share of the top ten companies in the index has declined.
What Investors Should Track
Investors may want to watch how traditional IT companies adapt their business models to incorporate artificial intelligence and whether these firms can pivot toward higher-value AI services. The key monitorable will be whether Indian indices eventually benefit from a broader economic shift toward AI-related infrastructure, or if the current reliance on traditional services continues to weigh on index concentration. Tracking company-level commentary on AI investments and the performance of IT services exports will provide clearer signals on how Indian businesses are navigating this global technological transition.