But that's still above the market's long-term average of 13.8 times and above the average of 14.2 for MSCI's emerging markets index. So the bargain hunters are unlikely to be rushing in en masse.

Goldman Sachs only darkened the mood on Wednesday by putting out a client note in which it said:

A critical concern for investors in Indian assets is sustained high inflation. There is considerable uncertainty about the timing and magnitude of the peak in inflation.

It raised its inflation forecast for the 2012 financial year to 6.7 per cent from 6 per cent and – pointing to the purchasing manager survey in the graph below – said input and output price expectations are at recent highs

That's not even the end of the bad news. Describing 2011 as "a year of mounting challenges for India", Standard Chartered analysts said that even after high inflation and moderating growth are digested, there is India's fiscal position to worry about.

They wrote in a report:

In FY12, we estimate that the fiscal deficit will widen to 5.1-5.2% of GDP on a lack of one-off revenue gains, along with increased expenditure driven by political considerations in an inflationary environment (inflation is expected to average c.6.5%). This deviation from the fiscal consolidation path could negatively affect investor confidence.