why certain companies are selected in Dow Jones Industrail index?

Answer 1

They are selectef for their high market capitalization, segmental leadership or categorical leadership in the industry segment, high liquidity, high performance and as representative of each industry of various industries participating in the Stock Exchange. The companies selected should be a true representative of similar companies in it's class. For example IBM in Information processing, GM in Auto, DuPont in Chemicals, Exxon in energy etc;. See they are highly traded daily and they are leaders in their representattive class. When they loose that stature they are dropped from the basket of companies comprising the Index here Dow Jones Industrial Average.