The Sensex rose by over 2,200 points, while the Nifty gained as much as 668 points during market hours.

Stock markets see biggest ever single day gains after govt slashes corporate tax
Money Stock Market Friday, September 20, 2019 - 16:10

The Sensex closed Friday's session with an unprecedented 5.32 per cent advance as Finance Minister Nirmala Sitharaman made yet another big-ticket announcement to kick start the economy. Sensex and Nifty logged their biggest ever single day gains on Friday following a massive tax relief for corporate India which fired up the stock markets.

The benchmark indices logged the biggest ever gains in the history of trading in India as the government slashed the effective corporate tax rate to about 25 per cent from 30 per cent.

Sensex advanced by a massive 1921.15 points to 38,014.62 while the broader Nifty jumped to 11,275.45 after gaining 570.65 points or 5.33 per cent.

At 2.38 p.m., the Sensex was up over 6 per cent or 2,237.13 points at 38,330.60. The broader Nifty was up 668.05 points or 6.24 per cent at 11,372.85.

The biggest beneficiaries among the 30 Sensex stocks were HeroMoto Corp, Maruti Suzuki, IndusInd Bank, Bajaj Finance, State Bank of India and Bajaj Finance, which gained in the range of 9 to 12 per cent.

The badly beaten down auto stocks gained the most. Nifty auto jumped over 9.90 per cent while the Nifty banks index gained over 8 per cent.

Sitharaman announced lowering of corporate tax rate on domestic companies to 22 per cent subject to such entity not availing any exemptions and incentives. Also, these companies will not be required to pay any Minimum Alternate Tax (MAT). Effective tax rate in this case would be 25.17 per cent, including cess and surcharge.

Further, the 'super-rich' tax will not apply on capital gains arising from the sale of any security, including derivatives in the hands of Foreign Portfolio Investors (FPI). To provide relief to the listed companies which have already made a public announcement of buyback before July 5, 2019, the government announced that tax on buyback of shares in case of such companies shall not be charged. These measures also boosted the investor sentiments in the market.

"The announcements made by the Finance Minister is very positive for the economy, corporates and the stock market. The effective tax after surcharges and cess will come down from 33 per cent to 25.17 per cent," said Rusmik Oza of Kotak Securities.

Also read: Finance Min Nirmala Sitharaman announces corporate tax relief for domestic companies