Stock market strategy: Cautious optimism amid valuation froth, Israel-Iran war; Small-caps, mid-caps still overheated

Stock market strategy: The Nifty 50 is trading at 20.9x one-year forward P/E — slightly below the long-term average — but small- and mid-cap stocks appear overheated. Emkay Global notes that 38% of BSE200 stocks now trade above their 5-year average valuation, up sharply from just 12% in April.

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