1. The 20 companies sample whose share prices are used to compute the index are not true representatives.

  2. The base year of 1996 is too far in the past

  3. New companies are not included in the index yet other firms have been suspended/deregistered e.g. ATH, KFB etc.

  4. Dormant firms – Some of the 20 firms used are dormant or have very small price changes.

  5. Thinness of the market – small changes in the active shares tend to be significantly magnified in the index

  6. The weights used and the method of computation of index may not give a truly representative index.