The Indian stock, bond and forex markets have all been falling together. True, global markets too have been nervous, what with the US Federal Reserve deciding to start shrinking its balance sheet, and geopolitical tensions. But as these three charts show, Indian stocks have done much worse than its emerging market peers, the yield on 10-year government bonds has gone up much more for India than others in the region, and the rupee has seen a sharper drop. There is, to a large extent, an India-specific problem.

One reason is simply that Indian valuations are higher and the higher they go, the harder they fall. But another reason is the sudden souring of sentiment on India’s macro story. In the last few weeks, concerns about the country’s growth have increased and there is a dawning realization that the structural reforms being attempted are no cakewalk. Higher oil prices have added to the unease.

The question then becomes: if earnings are not looking up, exports are not rising, there’s no sign of investment demand and now there are fears on the fiscal front, interest rate cuts have run their course and growth is expected to be tepid, why should Indian stocks be so expensive?