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.
This was one of the biggest ever single day gains in the history of trading in India which came after Sitharaman on Friday announced a slash in the effective corporate tax rate to about 25 per cent from 30 per cent.
The badly beaten down auto stocks gained the most. Nifty auto jumped over 11 per cent while the Nifty banks index gained nearly 10 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.
( With inputs from IANS )