A plunging currency, widening current account deficit and slack economic growth are among the factors that have made India ETFs among the worst performers in what has been a dismal year for emerging markets ETFs.

As the rupee has touched a series of record lows against the dollar, some global banks have called for the Indian currency to go to 70. Early this year, $1 bought just 55 rupees. The Reserve Bank of India is in a tough spot. It needs to raise interest rates to protect the rupee and stem the flight of capital out of India. Rate hikes, however, would be a tough pill to swallow for an economy that just posted its lowest growth in a decade. [India ETFs in Tailspin With Rupee]

Some of the major India ETFs have incurred double-digit losses in just the past month to bring their year-to-date losses, in some cases, north of 25%. However, there may be some signs of hope. On Wednesday, JP Morgan, which had previously downgraded India to underweight, issued a bullish call on Indian materials stocks such as Tata Steel, Hindalco Industries, NMDC, Sesa Goa and Steel Authority of India.

“FY14E should be the last year of big capex, and the transition to positive FCF[free cash flow] provides investors an attractive investment proposition. Tata has the best OCF profile vs. existing debt. Large levered companies – HNDL, SESA STLT, TATA and SAIL – have comfortable operating cash flows at current commodity price deck and demand environment and are our top picks. Valuations of 0.3-0.6x P/B [have priced in the downside scenario that] China driven commodity super cycle has ended at a time when debt is very high, domestic demand is very weak and projects are stuck,” according to a note from the bank posted by Shulli Ren on Barron’s.

The materials sector is not a big portion of some of the more familiar India ETFs. For example, the PowerShares India Portfolio (PIN) allocates about 7% of its weight to the sector while the WisdomTree India Earnings ETF (EPI) has a 9.4% materials weight. [India ETF Lowest Since 2009 on Plunging Rupee]

Hindalco, Sesa Goa and Tata Steel combine for about 3% of EPI’s weight. Nomura also had some encouraging things to say about Indian metals stocks.

“The underperformance of Indian metal stocks with respect to their global peers in local currency is also quite apparent. In common currency terms, the underperformance is even starker, especially given that most of the Indian metal companies are running globally competitive businesses,” the bank said, according to Barron’s.

Materials may not dominate India ETFs, but when combined with other sectors that have been framed as weak rupee winners, namely technology and health care, India ETFs could offer some rebound potential down the road. For example, those three sectors combine for 31% of EPI’s weight.