Small- and mid-cap stock rallies spark worries about market bubbles and valuations.
Small and mid-size stocks have seen a strong surge thus far in the current fiscal year, with the BSE Small cap climbing 12.89 percent and the BSE Mid cap rising 12.18 percent.
Concerns regarding stretched valuations and the potential for a bubble in the small- and mid-cap business sector have been raised by the recent, rapid increase in the stock prices of these companies relative to the benchmark index, the Sensex.
This is consistent with remarks made in March of this year by Madhabi Puri Buch, Chairperson of the Securities and Exchange Board of India (Sebi), in which she expressed concern about a potential bubble in the small- and mid-cap market that may harm individual investors. Even though the regulator's warnings caused an instant fall, stock prices have since climbed once more, especially in the small and mid-cap divisions. This suggests that investors in hazardous segments are still acting irrationally exuberantly.
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