September 23, 2019 / 5:01 AM / 23 days ago

Indian shares extend rally as corporate tax cuts boost growth hopes

* NSE index up 2.27%, BSE index rises 2.28%

* FMCG index records best session in over eight years

* TCS falls as much as 3.17%

By Derek Francis

BENGALURU, Sept 23 (Reuters) - Indian shares started the week on an upbeat note as investors expect the government’s surprise move to cut corporate taxes to revive flagging growth in Asia’s third-largest economy.

Both indexes recorded their best day in more than a decade after Finance Minister Nirmala Sitharaman on Friday cut the effective corporate tax rate to around 25% from 30% and scrapped the minimum alternative tax for domestic companies.

“There will be long-term benefits since the tax rates have come down ... there is no doubt about it,” said Madhumita Ghosh, Dean at Tasmac Global Solutions in Mumbai.

“The move will also stimulate FPI inflows.”

The broader NSE index was up 2.27% at 11,532.00, as of 0415 GMT on Monday, while the benchmark BSE index rose 2.28% at 38,904.70.

India’s fear gauge, the Nifty volatility index surged as much as 14.55%.

Most sectors extended Friday’s rally by moving sharping higher in early trade.

The Nifty fast-moving consumer goods (FMCG) index , which jumped up to 6.63%, marked its best session in more than eight years. Sector heavyweights Britannia Industries and ITC Ltd rose between 8% and 10% in early trading.

The Nifty auto index rose 4.38% as investors welcomed the stimulus boost to an ailing industry, which has seen massive inventory pile-ups and job cuts.

Financials were among the top gainers, with the Nifty banking index, which tracks both state-owned and private-sector lenders, rising up to 5.5%.

IT stocks, however, traded in the red with Tata Consultancy Services falling as much as 3.17%, while Infosys Ltd was down 3.7%.

The index was in the red on Monday after a brief rally last week even as the rupee traded strengthened by as much as 0.9% in the previous session. (Reporting by Derek Francis in Bengaluru, Editing by Sherry Jacob-Phillips)

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