For the fourth straight month, the Nifty 500, Nifty Smallcap, and Nifty Midcap 150 indexes are expected to gain. Many analysts think that high wider market valuations might limit gains in the absence of an earnings recovery.

According to a Moneycontrol Market Poll with 30 participants, the recent, rapid momentum recovery may have driven the wider market indexes into an overpriced area. Up to 62% of participants stated that they think the BSE 500, BSE Midcap, and BSE Smallcap indexes are now overpriced. For the fourth straight month, the Nifty 500, Nifty Smallcap, and Nifty Midcap 150 indexes are expected to see advances.

The BSE Midcap index increased 7.8 percent in March, 4.8 percent in April, and 6.15 percent in May. As of June, it has already increased by more than 3 percent. Over the same time frame, the Nifty Smallcap index has increased by 9.5%, 2.2%, and 8.7%, and it has gained an additional 3% thus far in June. After reporting increases of 7.3 percent in March, 3.2 percent in April, and 3.4 percent in May, the Nifty 500 is also up more than 2 percent in June.

Prashanth Tapse of Mehta Equities claims that market values have risen much beyond their longer-term norms and that, in certain situations, they don't seem sustainable unless they are backed by robust and steady profit growth in the upcoming quarters. Tapse said mood and liquidity, not actual profit growth, were mostly responsible for the current rise.

He has also issued a warning that certain dangers, such as geopolitical tensions, tariff worries associated with US President Trump, and unclear US Federal Reserve policy, might lead to a correction, although it might be beneficial. Short-term justification of present prices would require such a downturn, or earnings catch-up.