Strong buying was seen in the financial sector stocks, however, IT stocks slipped on the back of recovery in the rupee. Besides, S&P Mid-caps gained over 3 per cent, thereby outperforming the benchmark Sensex. Small-caps also jumped by 2.73 per cent.
"We believe that this rally has more legs to unfold," said Ruchit Jain, Equity Technical Analyst, Angel Broking. Another analyst from Angel Broking noted that the tax cuts would increase profitability for companies at the highest tax bracket by 14 per cent.
After flip-flopping between 39,441.12 and 38,674.04, the benchmark Sensex closed at 39,090.03, up by 2.83 per cent while the broader Nifty surged by 329.20 points or 2.92 per cent to 11,603.40.
Finance Minister Nirmala Sitharaman on Friday announced lowering of the corporate tax rate on domestic companies to 22 per cent, subject to such entities 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 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.
( With inputs from IANS )