Why not flip the argument, and say that the index fund is propping up stock B because of it's buy-at-any-price nature? What makes you think that valuing it at 1

Why not flip the argument, and say that the index fund is propping up stock B because of it's buy-at-any-price nature? What makes you think that valuing it at 10% of A isn't higher than what the market will actually bear? The sensible and consistent way to this is that... Index funds don't really have any effect on relative stock prices. If stock A is overvalued or undervalued, it's due to active investors being morons.