The stocks on the new index are selected on the basis of free float market cap, average trading volume with a 10% cap in individual securities.
The index has set the base date on 31-December-2005 and would be reviewed annually in March. The interesting part is that it is calculated both in US Dollar and Indian rupee to facilitate easy decision making for global investors.
Now the question arise, as to why is there a need for new index when the BSE Sensex is already well established and become a popular benchmark for Indian markets.
The main factors cold be that the new index may be well suited for needs of financial investors in other countries who want to take on a call on Indian markets. Also, when both the indexes are compared, it can be easily noticed that the DJIT index puts more emphasis on infrastructure and capital goods and has omitted some popular IT and financial sector stocks.
Maybe this can be a signal, that global invesotrs would bet on the traditional brick and mortar industries rather than on the sunrise service sector.