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Instead of going to the 'New' Stage in Leads, newly created leads are set to an 'Undefined' stage. How do you solve this issue?

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Check the type of Lead i.e Lead or Opportunity, when you are creating,

Generally Stage "New" will be applied for "both", unless you have changed it otherwise

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The setting is already the same as what you have described above. 'New' is applied for both lead and opportunity.

When about the value of "type", while creating a lead?