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• Midcap and smallcap stocks have outperformed the Nifty50 index over the last six months, with returns of over 27% and 40%, respectively.
• According to a report by Kotak Institutional Equities, the midcap and smallcap stocks are in a bubble market with unrealistic narratives and rich valuations.
• Large inflows into midcap and smallcap mutual funds and an increase in retail investors have been the prime triggers for the rally in the broader market stocks.