Up, up, and away! Key factors behind the stellar rally on Friday

Markets clock biggest single-day gain in a decade. Here’s what propelled the indices.

Sep 20, 2019 01:09 IST India Infoline News Service

Bull Market
Bulls regained control on D-street with benchmark indices marking the largest single-day gain in a decade on Friday. The Sensex jumped a whopping 1,921 points or 5.32% to end at 38,014. The Nifty also went way past the 11,000 mark and finished at 11,274, as investor sentiment improved to a great extent.

Here are the factors that brought the massive cheer to the markets:
Corporate tax cuts—a big positive for India Inc.: FM Nirmala Sitharaman addressed a press meet on Friday morning, which quite literally swept the markets off lows. In order to improve the performance of domestic companies, the FM slashed the corporate tax rate by 8% to 22% for existing companies and by 10% to 15% for new manufacturing companies. This being a long-standing demand of the corporates lifted the sentiment of India Inc. and market participants.

Enhanced surcharge on capital gains to go: The announcement that the enhanced surcharge levied on capital gains on the sale of any securities including derivatives in the hands of FPIs or domestic investors gave a headrush to investors.

Bye-bye to buyback tax: The FM said that buyback tax on companies that announced buyback before July 5, 2019, that is when the Union Budget was presented, would stand withdrawn.

High hopes from the GST Council meet: The GST Council meet is currently underway in Goa. Investors are pinning their hopes on rate cuts in troubled sectors such as auto and FMCG. GST cuts have been a long-standing ask form the auto sector that reels under the pressure of weak demand amid mounting inventory.

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