Domestic equity benchmark BSE Sensex has jumped over 1,600 points after Finance Minister Nirmala Sitharaman had announced cut in the corporate tax rate to 22 percent.
The BSE Sensex was earlier trading at 37,702.40, rising 1,608.91 points or 4.46 percent. Similarly, broad-based NSE benchmark Nifty traded at 474 points higher at 11,179.00, up 4.43 percent.
The major gainers are Maruti Suzuki, HDFC Bank, Mahindra and Mahindra, Larsen and Toubro, Tata Steel, Yes Bank, ICICI Bank, Tata Motors and Bajaj Auto that rose up to 8.29 percent.
The rupee has also rallied 66 paise to 70.68 against US dollar.
In a major fiscal booster, the government has slashed effective corporate tax to 25.17 percent inclusive of all CESS and other surcharges for domestic companies.
Finance Minister Nirmala Sitharaman has said that the new tax rate will be applicable from the current fiscal which began on 1 April. She said that the revenue foregone on reduction in corporate tax and other relief measures will be Rs 1.45 lakh crore annually. This is being done to promote investment and growth.
The corporate tax rate is expected to be at 22 percent for domestic companies.
The changes in the Income Tax Act and Finance Act will also be made effective through an ordinance. The minister has also said companies opting for 22 percent income tax slab will not have to pay minimum alternative tax (MAT).
In the previous session, the BSE barometer had ended 470.41 points, or 1.29 percent, lower at 36,093.47, whereas the Nifty has plunged 135.85 points, or 1.25 percent, to settle at 10,704.80.
According to experts, rate cut and a few measures taken by the government to boost the economy has also boosted investor sentiment.
After four successive rate cuts, RBI governor Shaktikanta Das said that there is more room to do so if given the growth deceleration and stable inflation that is likely to stay below target for a year or so.
Market is now awaiting cues from the GST Council which will meet to decide on tax moderation and keeping in mind the revenue position and the need to boost sagging economic growth.
Globally, resumption of trade talks between the US and China has also inflated market mood. Bourses in Shanghai, Hong Kong, Tokyo and Seoul have been trading on a positive note in their respective late morning sessions.
The rupee has appreciated 21 paise against its previous close at 71.12 in early session. Global oil benchmark Brent crude has gone up 0.33 percent to 64.61 per barrel (intra-day).
Foreign portfolio investor has sold shares worth a net of Rs 892.52 crore, while domestic institutional investors have bought equities worth Rs 645.72 crore.
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