It was on the same day, November 8, when two surprising events struck two different parts of the world. Americans lined up to bring Trump to the White House and India’s prime minister Narendra Modi announced note demonetization. As much as “86% of Indian currency and 12% GDP got stalled overnight."

As per the announcement, the Indian government withdrew high-denomination banknotes – 500 rupee and 1000 rupee notes – in circulation, as part of a clampdown against illegal money and corruption. Analysts expect this move to deal a direct blow to the finances of militants targeting India.  These militants allegedly used fake 500 rupee notes to fund their operations.

The notes in circulation need to be deposited in banks by the end of December. The last time that India saw demonetization was in 1978, when denominations of 1000, 5000 and 10000 were banned to fight corruption.

The immediate impact will be on inflation as eradication of unaccounted and untaxed money will have a deflationary effect. As per the source, real estate prices should come down. Some even view the step as an unplanned form of policy tightening, though India has been resorting to rate cuts in recent times to boost growth (read: 4 India ETFs to Buy as RBI Cuts Rate).

However, Global Financial Integrity estimated that “India lost $344 billion to illicit fund outflows between 2002 and 2011.” Whatever the case, Reserve Bank of India (RBI) reported that the total value of currency in circulation is Rs 16.4 lakh crore. Since a certain portion of this money is black, it won’t return to the recognized economy.

In a nutshell, the Indian economy is going to witness a cash crunch in the near term and its stocks may be hit. If this was not enough, Trump’ win in the U.S. is likely to cause uncertainty in the coming days in a few foreign economies and India will not be spared. This is because Trump was harsh on immigration and offshoring in his campaign. With outsourcing making up about 20% of India’s exports of goods and services, uncertainty looms large for India.

Thanks to the double whammy, India’s key equity gauge, the Sensex, initially plummeted 1,600 points on November 9, but eventually recovered. As a result, India ETFs like iShares India 50 (INDY - Free Report) and iShares MSCI India (INDA - Free Report) were up about 0.9% and 0.1%, respectively on November 9.

Still, some ETFs are in danger and below we highlight those India ETFs that may lose ahead.

Consumer

Though things  should be benefited over the long term, it is widely apprehended that the consumption-driven sectors will be hurt in the near term due to scarcity of cash. EGShares India Consumer ETF (INCO - Free Report) may be hit hard. The fund was down about 0.4% on November 9.

Small-Cap

Since small-cap stocks are a better barometer of the domestic economy, these should be under pressure. Investors should also note that about 40% of the Indian economy runs on small- and mid-scale companies which are largely cash-dependent. EGShares India Small Cap ETF (SCIN - Free Report), VanEck Vectors India Small-Cap Index ETF (SCIF - Free Report) and iShares MSCI India Small-Cap ETF (SMIN - Free Report) are at high risk now. SCIN, SCIF and SMIN were down 2.4%, 1.7% and 0.6% on November 9 (see all Asia-Pacific (Emerging) ETFs).

Infrastructure

Real estate developers will now have to lower prices. Not only the sector itself, analysts indicate that any hit to the real estate or infrastructure will leave long-standing knock-on effects on the other corners of the economy too. The behavior of EGShares India Infrastructure ETF (INXX - Free Report) should thus be on the watch list. The fund was off about 0.8% on November 9.