Indian stock markets today witnessed phenomenal one-day rally not seen in the last 10 years. Sensex ends trade today with gains of 1921.15 pts at 38,014.62, while Nifty jumped 569.4 points to 11,274.20.
The rally comes after capital markets cheered FM's corporate rate cut announcement earlier in the day today. The effective corporate tax rate is now 25% from an earlier rate of 35%. For new manufacturing companies that are incorporated on or after October 1, 2019 and start with production activity before March 2023, the corporate tax has been cut down from 25% to 15%.
Further, as part of the Rs. 1.45 trillion stimulus, the government has also done away with enhanced surcharge on capital gains on sale of equity share or a unit of an equity oriented fund or a unit of a business trust liable for STT that was announced in Full Budget 2019.
At the same time, the government has rolled back enhanced surcharge, announced in budget, on capital gains arising on sale of any securities that includes derivatives in the hands of FPIs.
Nifty Auto and Nifty Bank index were the biggest gainers in intra-day deal logging surge of 11% and 8%, respectively.Shares of HDFC Bank also advanced 10% in intra-day deal, its highest one-day gain in more than 30 months. For the quarter ended March, the effective tax rate at the bank stood at 33.4%.
Heavyweight Reliance Industries also rose over 8% to Rs. 1269.90 per share after the effective corporate tax rate has been brought down to 25.17% from more than 32%.
Shares of IT companies climbed higher in trade after the FM announced relief on the buyback tax. In order to provide relief to listed companies which have already made a public announcement to buyback shares before July 5, 2019, it is provided that tax on buyback of shares in case of such cos, shall not be charged, the Finance Minister said.
Yes Bank shares also staged a comeback and rose more than 8% to Rs. 58.65 on the NSE. The surge comes after one of the company's promoter sold a part of its stake in the bank.
Nonetheless, on tax booster dose, bond prices fell and bond yields surged to 6.8% from 6.6% levels as fears loomed on fiscal deficit front.
Meanwhile, rupee pares its early gains to trade at 71.02 per US dollar, down 0.42%.