Mumbai, Dec. 24: The Bombay Stock Exchange (BSE) will launch an index comprising stocks compliant with Islamic laws on Monday. Called the BSE Tasis Shariah 50, the index consists of the 50 largest and most liquid Shariah compliant stocks within the BSE 500. The bourse has partnered Taqwaa Advisory and Shariah Investment Solutions (Tasis) for the index.

Islamic law does not permit investment in companies that earn interest and make goods and services deemed sinful by Muslims such as alcohol, tobacco and firearms.

According to the BSE, the companies included in the new index have been screened by Tasis to ensure compliance with Islamic laws.

After the index constituents were chosen, the BSE authorities calculated the value of the index starting January 2008. It was found that the Shariah 50 has outperformed the sensex by nearly 25 per cent and the BSE 500 by over 30 per cent. Over this period, volatility for the Shariah 50 was less than both the sensex and BSE 500. The index is expected to help promote financial inclusion among Muslims and attract investment flows from international funds that adhere to Shariah norms.

According to BSE managing director and chief executive officer Madhu Kannan, “The introduction of the BSE Tasis Shariah 50 Index will give Islamic and other socially-responsible investors another means to access the Indian market and will help attract pools of capital to India from the Gulf, Europe, and Southeast Asia.”