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Our Bureau

New Delhi, June 25 A new index — EW India Islamic Index — comprising 644 shari’ah compliant companies was launched by the Delhi Chief Minister, Ms Sheila Dixit, here on Wednesday.

This index is full market capitalisation weighted index of Shari’ah compliant Indian listed companies and is technically a subset of the EW All Share Index, which is a diversified index comprising 1,425 companies and covering 99.5 per cent market cap of India.

The EW All Share Index was launched by Eastwind Capital Advisors, New Delhi.

The EW India Islamic Index is the result of a collaborative effort between Indo Arab Economic Co-operation Forum, Institute of Objective Studies and Eastwind Capital. This index is expected to be used by institutional and individual investors around the world for portfolio management and benchmarking purposes, as well as to serve as the basis for structured products and other index-linked investment vehicles as ETFs.

This index excludes companies in conventional financial sector (banks and insurance), companies engaged in alcohol products, pork-related products, entertainment industries such as hotels and casinos and all the other businesses that Shari’ah supervisory board considers as unethical.

Thus, a large bank like State Bank of India, which is present in S&P CNX 500, does not find a place in the EW India Islamic Index. This is because riba (interest) is forbidden in Islam and the main source of revenue for banks like SBI is interest income, sources pointed out.

Jet Airways, which is present in S&P CNX 500, does not figure in the EW India Islamic Index.

“It is because of high debt leverage that Jet Airways was not included in our shari’ah compliant index. The airline was excluded after financial screening”, an official from Eastwind Capital Advisors said.

The EW India Islamic Index constitutes 644 Shari’ah compliant companies with total market capitalisation of Rs 41,36,880 crore. It covers nine broad sectors and 68 sub-industries.

Some of the top companies that figure in the index include Reliance Industries, ONGC, NMDC, Bharti, NTPC, MMTC, Infosys Technologies, DLF and Reliance Communications. The nine broad sectors are information technology, energy, materials, industrials, consumer discretionary, consumer staple, health, utilities and telecom.

Indian fund houses have been gearing up to exploit the opportunity to absorb large investments of the Arab Islamic countries.

While SBI Mutual Fund has already introduced a Shari’ah compliant off-shore fund under “SBI Resurgent India opportunities Fund’, UTI Mutual Fund has an “offshore Shari’ah compliant Fund” and now looking to start a domestic Shari’ah fund.

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