Widely known is the fact that India ETFs have struggled this year and that might be putting it kindly. Although most emerging markets ETFs have been laggards this year compared to developed market equivalents, India funds have stood out and for all the wrong reasons.

At the anecdotal level, this is how bad India ETFs have been in 2013: The PowerShares India Portfolio (NYSEArca: PIN) is down 12.6% year-to-date, a performance that is good enough make PIN one of the best of the India bunch. A closer look at the $316.4 million PIN highlights why the fund has outpaced its rivals, although that is not saying much, and why it is positioned to do the same if India ETFs turn for the better. [Rupee’s Plunge Could Affect Several ETFs]

The faltering rupee is one of the primary culprits behind India’s equity market woes this year, having touched a series of record lows against the U.S. dollar. A plunging rupee has put the spotlight on India’s widening current account deficit. In more sanguine times for emerging markets, weak currencies were seen as a benefit to export-dependent nations, but India’s lack of domestic natural resources exacerbates the weak currency situation. [India ETFs: A Train Wreck Awaits]

However, the sliding rupee is not bad news for every sector of the Indian equity market. Some sectors have been identified as possible beneficiaries of the lower rupee and PIN happens to hold decent exposure to those groups. For example, profits from exported outsourcing and technology services mean more rupees when the currency falters.

“Indian IT remains the key buy in Asia on the theme of a recovery in enterprise spending. About 42% of total enterprise spending is made on IT services, making it one of the beneficiaries of any increase in the pie. Secondly, we believe spending is likely to pick up first on software and services and later on hardware. This earnings season has been good for the Indian IT names wherein most companies ended up seeing upgrades to their revenue and earnings estimates for the next 12 months,” said Credit Suisse analyst Manish Nigram, according to Barron’s.

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