Despite some decent economic news out of Chin over the weekend, emerging markets ETFs are basically a mixed bag on Monday. Funds tracking China, such as the iShares FTSE China 25 Index Fund (NYSE: FXI), or those with significant exposure to the world's second-largest economy such as the iShares MSCI Taiwan Index Fund (NYSE: EWT), are trading slightly higher.
On the other hand, Latin America ETFs and Russia funds are mostly trading lower, though the losses are tolerable. The real sea of red can be spotted with downtrodden India ETFs as some old news is being treated as new, roiling investors with exposure to Asia's third-largest economy.
Overnight, India's benchmark Sensitive Index and the already embattled rupee plunged after rating agency Standard & Poor's said the "I" in the BRICS acronym is in danger of losing its investment grade credit rating.
This isn't a surprise because in April, S&P pared its outlook on India's BBB- rating to negative from stable. Citing deteriorating economic fundamentals, S&P reiterated the view that India is in danger of losing its investment grade status. At BBB-, India has the lowest investment grade rating possible.
Follow us 
Said differently, S&P has a higher rating on Spain than it does on India, at least for the moment. Shares of the WisdomTree India Earnings ETF (NYSE: EPI), the largest India ETF by assets, are lower by 2.6%. The PowerShares India Portfolio (NYSE: PIN) is off 2.2% while the Market Vectors India Small-Cap ETF (NYSE: SCIF) is down 2.4%. SCIF is now within spitting distance of its 52-week low and has spent much of the past several weeks trading below $10 after being one of the best-performing ETFs in the first quarter.
As Benzinga noted in April, even at BBB- with a negative outlook, India is in some dubious company. That same rating/outlook combination is held by Barbados and Tunisia making India the lowest-rated of the BRICS by S&P.
The fall from economic grace has been rapid for India. Amid rising deficits, slowing GDP growth (Indian GDP growth was just 5.3% last year, the worst increase in nine years) and concerns that the Indian government is turning a blind eye to the country's economic woes, major India ETFs have been slammed. In the past 90 days, EPI has lost almost 20% while PIN has dropped 18.4%. By comparison, the iShares S&P India Nifty 50 Index Fund (Nasdaq: INDY) looks good over the same time frame with a loss of "just"16.4%.
The road ahead for India and its corresponding ETFs doesn't get any easier as headline risk is imminent. Industrial production data is due out this week. More importantly, so is inflation data. Inflation is a four-letter word in India as none of the other BRICS constituents have been hammered by inflation over the past 12-18 months the way India has been. India's current account and fiscal deficits surged in its most recently completed fiscal year and a spate of interest rate hikes by the Reserve Bank of India last year proved largely ineffective in damping inflation.
In the near term, India risks being the answer to three ominous trivia questions: Who was the first BRICS to lose its investment grade status? What BRICS member has the lowest credit rating? (That risk has passed as the answer is already India.) And what country did Indonesia replace as a member of BRICS?
As for the question what's the best way to play India via ETFs these days, the answer is very likely the Direxion Daily India Bear 3X Shares (NYSE: INDZ).
For more on India ETFs, please click HERE.
This article was originally published on Benzinga, and is republished here with permission.
More ETF Stories
ETFs to Watch June 12, 2012 (BOND, FXP, EPV)
Exchange Traded Concepts to Launch Oil Sands ETF
Coal Carnage: Coal Stocks, ETFs Getting Worse, Not Better (KOL, PKOL, ANR)
