Is it from the Sunnah to raise the index finger and point it at the deceased, and to recite the Shahadah when taking the deceased out to the graveyards?

The action mentioned in the question—pointing at the funeral with the index finger—is not from the Sunnah, as there is no narration stating that the Prophet (peace be upon him) used to do it. Some scholars have mentioned that pointing at the funeral with the index finger has no basis, citing Al-Bujairimi's statement in his commentary on Al-Khatib that raising the index finger is specific to the Tashahhud as an act of worship, and thus nothing else can be analogized to it, and that what is done upon seeing a funeral has no basis. The Messenger of Allah (peace be upon him) said: "Whoever introduces into this matter of ours that which is not from it, it is to be rejected." And in the wording of Muslim: "Whoever performs a deed that our matter is not upon, it is to be rejected." Al-Nawawi stated that this hadith is a great principle in rejecting all innovations and newly invented matters.