CNX IT Sector Index

Information Technology (IT) industry has played a major role in the Indian economy during the last few years. A number of large, profitable Indian companies today belong to the IT sector and a great deal of investment interest is now focused on the IT sector. In order to have a good benchmark of the Indian IT sector, IISL developed the CNX IT sector index.

Companies in this index are those that have more than 50% of their turnover from IT related activities like software development, hardware manufacture, vending, support and maintenance. The index is a market capitalisation weighted index with its base period being December 1995 and the base date and base value being January 1, 1996 and 1,000 respectively.

CNX IT Sector Index

CNX IT Index is an index comprised of the most liquid and large capitalization IT stocks, traded on the NSE, engaged in the business of software or hardware. CNX IT provides investors and market intermediaries with an appropriate benchmark that captures the performance of the IT segment of the market. The index is a market capitalization weighted index with base date being 1st January 1996 and base index value being 1000. Companies selected in the index have to be IT stocks which should rank high in terms of market value represented by their market capitalization and liquidity.

The Base Value of the index is being revised from 1000 to 100 w.e.f. 28 May 2004.

Computation Method

The CNX IT Index is calculated using the market capitalisation weighted aggregate method.

Criterial Of Selection

  1. Market Capitalisation
    The influence of each company on the index is directly proportional to its market value. Therefore, a company’s rank based on the average market capitalisation over a 6 month period is an important consideration for its selection in the CNX IT Index.
  2. Trading Interest
    The companies considered for inclusion must rank among the highest in the IT sector in terms of annual trading turnover and must have demonstrated a high level of trading frequency in the previous 6 month period.
  3. Others
    A company which comes out with a IPO will be eligible for inclusion in the index, if it fulfills the normal eligiblity criteria for the index for a 3 month period instead of a 6 month period.

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