Prasad said he is dropping his recommended mid-cap portfolio as he has “largely run out of options” in trying to pick stocks that offer further upside potential. His view echoes sentiment from JPMorgan Chase & Co., whose India strategist Sanjay Mookim told Bloomberg earlier this month that the outperformance of smaller companies is in “extreme territory”.

In contrast, HSBC Securities Strategist Amit Sachdeva last week said that the rally in Indian mid-cap stocks had only progressed about half way, based on past cycles. And Goldman Sachs Group Inc. notes that mid-caps are becoming more popular with investors in Indian stocks, showing confidence in the market even despite concerns over high valuations.

Eoin Treacy's view

The Nifty Index touched the big psychological 20,000 level for the first time today. Renewed enthusiasm about India’s growth prospects and its ability to attract inward investment following the G-20 meeting are the likely catalyst for the rebound over the last two weeks.