New Delhi, April 3 -- Smid (small- and mid-cap) indices have recovered from their mid-March lows, after warnings of froth. The Nifty Midcap 150 hit a record 18,400 on Wednesday and the Nifty Smallcap 250 was just 2.8% shy of its 7 February record. Can this uptrend continue? Mint analyses.

Broader market indices have outperformed large-caps, with the Nifty Smallcap 250 and Midcap 150 generating annualized returns of 21.36% and 22.2% over the past five years. This is significantly higher than Nifty's annualized return of 13.93% over the same period. But the valuation picture is mixed. While the Nifty Midcap 150 traded at a price-to-earnings multiple (P-E) of 35.81 at end-FY24, above the historic 30.91 times median, the small-cap index trad...