Despite the selloff, South Asia's markets have further to fall, Goldman Sachs said, cutting its targets for the region.
"Slower growth and tighter liquidity now justify lower valuation multiples," Goldman said in a research note, adding that margin assumptions in earnings forecasts looked optimistic.
While Southeast Asia's valuations have already pulled back "meaningfully", as markets price in the Federal Reserve's plan to taper its asset purchases, the region's valuations still look stretched, Goldman said, adding that it expected 5-to-10 percent valuation downside.
(Read more: Goldman upgrades China growth, cuts India outlook)
It cut its earnings growth expectations for 2013 and 2014 for the region to 4 percent and 10 percent respectively, down from 6 percent and 12 percent.
Goldman saw significant further downside ahead for the region's stock markets, which have fallen between 3 percent and 19 percent over the past three months.