The OTCEI index is a pure price index. The sum of the prices of all shares as of June, 1993 is in the denominator. The current prices are in the numerator. New scrips are added to both the numerator and denominator. Adjustments for rights and bonus issues are also made. There is no element of market capitalization in the OTCEI index.
This is not intended for portfolio managers and traders. It is intended to reflect the mood (bullish or bearish) accurately for small investors. This index is similar to TOPIX in Japan.
The OTCEI carried out several simulations to study the variations in the index. A weighted index system was also simulated, before selecting the basis. With only 41 companies listed, and with more than 40 percent market capitalization accounted by three companies [Renewable Energy System, Maxwell Apparel, and Biochem Synergy], a weighting system at this stage would not achieve much. Hence, they opted for pure price index.