Dow Jones Indexes today launched the Dow Jones Islamic Market India Index.

The new index measures the performance of stocks traded on the Bombay Stock Exchange that pass screens for Shari’ah compliance, the company said in a statement.

The Dow Jones Islamic Market (DJIM) India Index is designed to underlie financial products such as exchange-traded funds.

“The Dow Jones Islamic Market Indexes was the first-ever index family to measure Shari’ah-compliant equities and has since grown to more than 70 indexes. As the Islamic banking and finance industry continues to grow worldwide, our goal is to provide the investment community with the most comprehensive benchmarks of companies that comply with Islamic investing principles.

The Dow Jones Islamic Market India Index furthers this goal by capturing the performance of Shari’ah-compliant stocks in a country of increasing prominence to the global investment community.” said Michael A. Petronella, president of Dow Jones Indexes.

Launched in 1999, the Dow Jones Islamic Market Indexes seeks to measure the global universe of investable equities that pass screens for Shari’ah compliance. The index family includes more than 70 regional, country and industry indexes derived from the flagship Dow Jones Islamic Market World Index.

Other indexes in the DJIM index series are the Dow Jones Islamic Market Sustainability Index, which combines Islamic investing principles with sustainability criteria; and Dow Jones Citigroup Sukuk Index, the first index to track Islamic bonds. The DJIM Indexes combine Islamic investment principles with Dow Jones Indexes’ objective, transparent and rules-based methodology.

A six-member supervisory board of Islamic scholars also counsels Dow Jones Indexes on the Shari’ah compliance of eligible stocks for the DJIM Indexes.

The index universe for the DJIM India Index is defined as all stocks in the Dow Jones Wilshire India Index. To be included in the DJIM India Index, stocks must pass industry and financial ratio screens for Shari’ah compliance. Companies that are involved in alcohol, defense/weapons, entertainment, financial services, pork-related products and tobacco are excluded.

Also excluded are companies for which the following financial ratios are 33 per cent or more: debt divided by trailing 12-month average market capitalisation; cash plus interest-bearing securities divided by trailing 12-month average market capitalisation; and accounts receivables divided by trailing 12-month average market capitalisation.

Stocks that meet these requirements become components of the DJIM India Index.

The DJIM India Index is weighted by float-adjusted market capitalisation and component weights are capped at 10 per cent. The index is reviewed quarterly in March, June, September and December. Daily history is available back to December 30, 2005.

As of December 11, 2007, the top five components by float-adjusted market capitalisation are Reliance Industries, Larsen & Toubro, Infosys Technologies, Bharti Airtel, and Reliance Communications. The DJIM India Index is up 44.39 per cent year to date.

The index is calculated in US Dollar (USD) and Indian Rupee (INR).--TradeArabia News Service