Mumbai, June 10 -- Despite recovering from their March lows, small- and mid-cap stocks continue to trade at elevated valuations, indicating that the correction has not eliminated froth, even as the West Asia war continues to weigh on investor sentiment.

A Mint analysis of 3,756 BSE-listed companies shows that valuation excesses began correcting from the September 2024 peak, even before the US and Israel launched air strikes on Iran on 27 February 2026.

The war-led correction deepened the reset, but the recovery since March has pushed several stocks back into expensive zones.

For investors, this means stock selection may matter more than simply buying the dip.

During the September 2024 high, 16.8% of the BSE-listed companies analysed b...