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Sensex closes 1,921 points higher, Nifty ends above 11,250 after corporate tax rate cut

While Sensex closed 1,921 points or 5.32% higher at 38,014, Nifty ended 5.32% or 569 points higher at 11,274.

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Market cheers corporate tax rate cut: Sensex closes 1,921 points higher, Nifty ends above 11,250; banking, auto stocks lead gains
Intra day, Sensex surged 2,285 points to 38,378 level against previous close of 36,093 points. Nifty too zoomed 677 points to 11,381 against previous close of 10,704.

Sensex and Nifty closed over 5% higher today after the government cut corporate tax rate to 22% per cent from the current 30%. The new tax rate inclusive of all cess and surcharges will now stand at 25.17%. While Sensex closed 1,921 points or 5.32% higher at 38,014, Nifty ended 5.32% or 569 points higher at 11,274. Intra-day, Sensex surged 2,285 points to 38,378 against previous close of 36,093 points. Nifty too zoomed 677 points to 11,381 against previous close of 10,704.

Sensex and Nifty which were trading flat before the announcement zoomed over 5% each.

Sensex had last logged biggest single day intra-day gain of 2,110.79 points on May 18, 2009 when investors resorted to heavy buying after the United Progressive Alliance emerged victorious in the 2009 General Election. On May 20, 2019, Sensex logged its highest closing gain of 1,421 points or 3.75% after exit polls predicted that BJP-led National Democratic Alliance (NDA) would get a clear majority in Lok Sabha election.

"The markets have been asking for a big fiscal stimulus and the government has delivered," said Rusmik Oza, head of fundamental research at Kotak Securities in Mumbai.

Also read: 'Bold decision, will help revive economy': RBI Governor Shaktikanta Das' first reaction to corporate tax cut

Of 30 Sensex components, 25 ended in the green.Hero MotoCorp (12.52%), Maruti Suzuki (10.89%), IndusInd Bank (10.74%) and Bajaj Finance (10.19%) were the top Sensex gainers. Banking, auto, consumer durables and capital goods stocks led the gains on BSE with their indices rising 1,531 points, 2,475 points, 1,775 points and 1,327 points, respectively.

Mid cap and small cap indices closed 6.28% and 3.94% higher by 834 and 500 points, respectively. Analysts said the move to cut corporate tax is a huge positive for FIIs to relook at India as a favoured investment destination.

The cut in tax rate will also provide a strong impetus to earnings of corporate India and kickstart the Indian economy reeling under the economic slowdown, they added.

Commenting on the corporate tax rate announcement, Mustafa Nadeem, CEO at Epic Research said, "Markets have totally taken it as something which has turned the table for medium to long term. Today's reaction is totally out of surprise and it will be acting as strong support for the coming weeks and months. 10,700 - 10,800 is now set to be a strong base for Nifty and we may see continuity in positive momentum on any dips from here on."

While Bank Nifty gained 2,223 points to rise nearly 8.31% to 28,981, BSE bankex rose 2475 points or 8.21% to 32,625.

Market breadth was positive with 1864 stocks closing higher compared to 728 falling on BSE. 144 stocks were unchanged. While Bank Nifty gained 2,223 points to rise nearly 8.31% to 28,981, BSE bankex rose 2475 points or 8.21% to 32,625. Market breadth was positive with 1864 stocks closing higher compared to 728 falling on BSE. 144 stocks were unchanged.

Also read: Corporate tax cut to cost govt Rs 1.45 lakh crore

Edited by Aseem Thapliyal

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