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Sensex closes 1,921 points up, Nifty zooms past 11,000 after Sitharaman announces reduction in corporate tax rate

Equity indices surged by over 5% on Friday to record highs as Finance Minister Nirmala Sitharaman announced a slew of measures to boost growth. 

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Stock prices displayed on a digital screen outside BSE building, in Mumbai, Friday, Sept 20, 2019
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Equity indices surged by over 5% on Friday to record highs as Finance Minister Nirmala Sitharaman announced a slew of measures to boost growth. 

To revive the sluggish economy, Sitharaman announced a reduction in corporate tax rates to shore up growth and investments.

The development came ahead of a crucial meeting of the Goods and Services Tax (GST) Council on whether or not to cut rates for sectors like automobile, tourism, FMCG and others which have witnessed slowdown due to economic slump.

Responding positively to Centre's announcements, Sensex zoomed past 38,000 and closed 38,014.62, registering a gain of 1,921.15 points or 5.32%.

The Nifty 50 posted its one of the biggest intra-day jump by clocking a gain of 569.40 points (5.32%) to close at 11,274.20.

At the National Stock Exchange, all sectoral indices were in the green with Nifty auto up by over 8%.

Auto stocks accelerated with Eicher Motors, Maruti, Hero MotoCorp and Tata Motors emerging as biggest gainers. 

The other prominent winners were IndusInd Bank, Bajaj Finance, State Bank of India, UltraTech Cement and Titan. IT stocks too were under pressure with Tata Consultancy Services, Tech Mahindra, Infosys and HCL Tech in the red. 

Earlier during the day, to revive the sluggish economy, Sitharaman announced a reduction in corporate tax rates to 25.17%, inclusive of all surcharges and taxes. For the new manufacturing firms, the tax has been slashed to 17.01%.

Without any incentives, the effective rate for the existing domestic and new manufacturing companies will be 22% and 15% respectively.

The current rate of corporate tax for the two categories is 30% and 25% respectively.

The total revenue foregone on account of reduction in the corporate tax rate and other relief is to the tune of Rs 1.45 lakh crore, the minister said.

(With ANI inputs)

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