Exchange traded funds following Indian stocks rose in early U.S. trading Tuesday after the central bank slashed interest rates by a half point, more than expected.

The Reserve Bank of India lowered short term rates by 50 basis points to 8% to boost the economy but warned that inflation risks would hinder its ability to ease further in the future.

“India’s rupee has been under pressure as foreign investors worry about persistent inflation, a yawning current account gap and fiscal indiscipline on the part of New Delhi, prompting concern about the country’s balance of payments,” Reuters reported. “Investors and companies cheered the rate cut, with bond yields and swap rates falling sharply, although the rally was capped by expectations for few further cuts in the near term.”

Exchange traded products that track India include WisdomTree India Earnings Fund ETF (NYSEArca: EPI), iPath MSCI India ETN (NYSEArca: INP), Powershares India Portfolio ETF (NYSEArca: PIN), iShares S&P India Nifty 50 Index Fund ETF (NYSEArca: INDY) and iShares MSCI India Index Fund (NYSEArca: INDA).

The funds jumped more than 2% at Tuesday’s open.

For small-cap stocks, investors can use Market Vectors India Small-Cap Index ETF (NYSEArca: SCIF). [ETF Spotlight: India Small-Caps]

India ETFs rallied sharply to start the year but have trended lower after peaking in mid-February. [India ETFs Cool After Fast Start to 2012]

WisdomTree India Earnings Fund ETF

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