Mid and small-cap indices trading at rich valuations: Are they really that expensive?

Mid- and small-cap stocks have been outperforming frontline stocks ever since the market rebounded from the March 2020 lows. The BSE Midcap index and BSE Smallcap index have surged 133% and 183% respectively in this time, even as the BSE Sensex gained 103%. This sharp uptick in the broader market has sent index valuations to lofty heights. But are these names really as expensive as valuations suggest? After the surge of the past 15 months, the