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
- 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.
- 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.
- 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.
