It is narrated from Sayyiduna Abdullah bin Umar (may Allah be pleased with them both) that when the Noble Prophet (peace and blessings be upon him) would sit at the end of the prayer (for Tashahhud), he would place his left hand on his left knee and his right hand on his right knee, and he would keep his finger raised.
Hadith Referenceسنن دارمي / من كتاب الصللاة / 1376
(Commentary on Ahadith 1374 to 1376) That is, in Tashahhud, he used to gesture with the index finger. Its manner is described in Sahih Muslim as follows: he would place the thumb on the middle finger and gesture with the index finger (sabbaba), and he would continue this gesture throughout the entire Tashahhud. There is no evidence for gesturing at the time of «إِلَّااللّٰه». I heard from Samahat al-Shaykh Ibn Baz rahimahullah that when mentioning the name of Allah, one should move the finger; the fingers should remain spread on the knees, and then there is also no proof for making a ring (contracting the fingers) at the time of «أَشْهَدُأَنْلَاإِلٰهَإِلَّااللّٰه» and gesturing with the finger. And at the time of gesturing, the gaze should remain upon the finger, as is mentioned in Sunan al-Nasa’i.