Below is a chart of Nifty historical PE from 1999 onwards till today.
The PE data is sourced from NSE website. I assume it is trailing twelve months (TTM) PE. In any case, we will attempt a broad investing theme here so as long as we follow NSE data the analysis remains valid.
Broadly speaking, the PE zone above 20 is high valuation zone for Nifty. However it is difficult to draw conclusion as to how long Nifty PE will stay above 20 once it reaches there. Though it must be said that since 2003 bull market it has not stayed above 20 PE for too many months except for Sep 08 to May 08 period when it stayed there for 9 months.
The PE values below 13 define the low valuation zone for Nifty. Interestingly the chart shows that Nifty has not stayed in low valuation zone for more than few months. On the other hand, since Oct 08 it has spent rather long period of time in and around low valuation zone.
Still it is clear that if Nifty sells off to PE of 11 which is another 15-20% below, it will be a terrific buying opportunity according to historical data. The caveat remains that if Nifty earnings take further hit in coming quarters then again PE will decline and we could spend much more time below Nifty 3000.