There is no known source in Jewish literature for this widespread Jewish custom. Perhaps it is one of those customs that has just developed and survived over time because it is so fitting. Many see lifting the pinky toward the Torah as a nice way to point (nicer than using the index finger), and they see the pointing as a way to emphasize the words "This is the Torah" being recited.

The custom is mentioned in writing as far back as the early eighteenth century. Rabbi Yaakov Kuli, in Yalkut Me'am Lo'ez (Parshat Ki Savo, perek 17), describes laws and customs regarding the raising of the Torah. Rabbi Kuli writes "And there is a custom [during the hagba] to point with the little finger over the writing [of the Torah] and then kiss it." While the rabbi describes the custom, he does not provide any reason for it.

There is a Midrash that says the Jews "pointed at God" when they said the words "This is my God" at the splitting of the Red Sea. Perhaps there is a connection between the pointing at God as the Sea parted and the pointing at the Torah as it is being lifted. In both cases, there is recognition of the holy via both reciting words and pointing a finger.