Indian shares are valued at 10.9 times analysts’ estimated 2008 earnings, based on the median of 573 companies. That’s the lowest among the four BRIC markets. Makers of steel, cement and other materials have the biggest discounts, with a median price-earnings ratio of 8.

Prime Minister Manmohan Singh’s government last month asked companies to consider sacrificing some profits to help contain inflation, which doubled in the past four months. Wholesale prices increased 7.61 percent in the week ended April 26 from a year ago, the fastest since November 2004, India said last week.

Mumbai-based Tata Steel Ltd. and JSW Steel Ltd., and New Delhi-based Steel Authority — India’s three biggest steelmakers — cut prices for a second time since April after meeting with Singh last week. Higher costs may cut margins “substantially,” JSW Steel said. The industry agreed last month to pay three times more for coking coal and 65 percent more for iron ore.

India last week said it’s also seeking to persuade cement makers to cut prices. Grasim on April 29 forecast that profit margins at its cement and yarn units will narrow this fiscal year because of higher raw-material costs.

Valuation Disparity

The 8.5 times estimated earnings investors pay for Grasim is the lowest since at least March 2002, compared with reported profits. The stock lost 36 percent in 2008.

In contrast, valuations for Anhui Conch Cement Co., China’s biggest maker of the construction material, dropped 11 percent in Hong Kong. The company, based in Wuhu City in eastern China’s Anhui province, said last month first-quarter profit doubled because it was able to increase prices.

China, which has $1.68 trillion in foreign reserves, more than five times India’s balance, has beaten out its South Asian rival on the purchases of over $10 billion in oil and gas assets from Nigeria, Kazakhstan and Canada in the past two years.

“The Chinese government just has their act together more than the Indian government does,” Landesman said. “I have no idea what I’m going to get from India.”

As the skepticism about India grows abroad, the domestic players seem much more confident. Experts in India believe that the present slow down is just a blip in the India Growth story. The momentum is too strong to be stopped although it will have its ups and downs in the coming years.