Irrational exuberance in mid- & small- cap stocks: Kotak Equities

Mumbai: Kotak Institutional Equities said the primary driver of the recent rally in mid- and small-cap stocks appears to be "irrational exuberance" among investors, with high return expectations and purchase decisions being driven by the elevated returns in the past few months.

The brokerage said it does not see "many fundamental reasons" for the "meteoric rise" in the stock prices of many mid-cap and small-cap stocks.

"We see limited point in trying to find fundamental reasons behind the steep increase in stock prices of several mid-cap and small-cap stock," said Kotak's analysts including Sanjeev Prasad, Anindya Bhowmik and Sunita Baldawa in a report tiled "Mad (-cap.) dash".