Top gainers in the Sensex pack in early trade included Yes Bank, HDFC Bank, Maruti, Hero MotoCorp, Kotak Bank, HUL, M&M, Bajaj Auto and IndusInd Bank, rising up to 2.22%.

Domestic equity benchmark BSE Sensex jumped over 1,900 points after Nirmala Sitharaman announced cut in the corporate tax rate to 22 percent.

The BSE Sensex closed at 38,014.62, rose 1,921.15 points or 5.32 percent. During the day, it jumped over 2,200 points at 38,378.02. The 30-share index posted the biggest single-day gain in ten years. Similarly, broad-based NSE benchmark Nifty also ended 569 points higher at 11,274.20, up 5.32 percent. As a result, investors' wealth soared by a staggering Rs 6.8 lakh crore. The market capitalisation of BSE-listed companies jumped to Rs 145,37,378 crore, from Rs 138,54,439 crore on Thursday.

This is the second time the benchmark Sensex jumped over 2,000 points in the single trading day. Earlier, on 18 May 2009, the index had soared over 2,100 points after Congress-led UPA government returned to power for the second time.

The major gainers among the Sensex pack include, Hero MotoCorp, IndusInd Bank, Maruti Suzuki, Bajaj Finance, HDFC Bank, Mahindra and Mahindra, Larsen and Toubro, Tata Steel, Yes Bank, ICICI Bank, Tata Motors and Bajaj Auto rising up to 13 percent.

In a major fiscal booster, the government on Friday slashed effective corporate tax to 25.17 percent inclusive of all cess and surcharges for domestic companies.

Making the announcement, Finance Minister Nirmala Sitharaman said the new tax rate will be applicable from the current fiscal which began on 1 April.

Sitharaman said the revenue foregone on reduction in corporate tax and other relief measures will be Rs 1.45 lakh crore annually.

This, she said is being done to promote investment and growth.

In effect, the corporate tax rate will be 22 percent for domestic companies, if they do not avail any incentive or concession.

The minister also said companies opting for 22 percent income tax slab would not have to pay minimum alternative tax (MAT).

Sitharaman further said, new domestic manufacturing companies incorporated after 1 October, can pay income tax at a rate of 15 percent without any incentives.

Meaning, the effective tax rate for new manufacturing companies will be 17.01 percent inclusive of all surcharge and cess.

Sitharaman further said companies can opt for lower tax rate after the expiry of tax holidays and concessions that they are availing now.

The finance minister also said the government will not levy the enhanced surcharge introduced in the Budget on capital gains arising on sale of equity shares in a companies liable for a securities transaction tax.

Also, the super-rich tax will not apply on capital gains from the sale of any security including derivatives in hands of foreign portfolio investors.

In another relief, the finance minister said listed companies which have announced a buyback of shares prior to 5 July will not be charged with the super-rich tax.

"Markets gave complete thumbs up to the decision as it is expected to give much room for corporate India to reinvest the money into building capacity and fuel growth for the long term while providing immediate support to its waning earnings in the near term," said Narendra Solanki, Head Fundamental Research (Investment Services) - AVP Equity Research, Anand Rathi Shares & Stock Brokers.

The Sensex and Nifty clocked their highest one-day gain in over a decade on the back of these announcements.

On the other hand, PowerGrid, Infosys, TCS, NTPC and Tech Mahindra ended in the red, losing up to 2.39 percent.

Sectorally, BSE auto, bankex, capital goods, consumer durables, finance, energy, oil and gas, metal and telecom indices rallied up to 9.85 percent.

Only IT and teck closed in the red, losing up to 1.09 percent.

The broader BSE midcap and smallcap indices followed the benchmarks, surging up to 6.28 percent.

During the week, Sensex gained 629.63 points or 1.68 percent, while the Nifty advanced 198.30 points or 1.79 percent.

The rupee too appreciated 40 paise to close at 70.94 against US dollar following the finance minister's announcements. Intra-day it surged up to 66 paise to 70.68.

"The new corporate tax reforms by the government is music to the investors' ears and will help to revive economic outlook in the coming quarters. FIIs now have a good reason to come back to India and this progressive step will stimulate consumption and ignite capex cycle.

"Additionally, companies will get more elbow room to pass on benefits to customers, which in-turn will improve earnings visibility," said Vinod Nair, Head of Research, Geojit Financial Services.

Devang Mehta, Head - Equity Advisory, Centrum Wealth Management, said, "Today's measures, without exaggeration, have revived the sagging economic situation and has reinfused the 'Josh' amongst the corporate and capital market fraternity."

Meanwhile, Brent crude futures rose 0.64 percent to $64.84 per barrel (intra-day).

Elsewhere in Asia, Shanghai Composite Index, Nikkei and Kospi ended on a positive note, while Hang Seng settled in the red.

Stock exchanges in Europe were trading higher in their respective early sessions.

In the previous session, the BSE barometer ended 470.41 points, or 1.29 percent, lower at 36,093.47, while the Nifty plunged 135.85 points, or 1.25 percent, to settle at 10,704.80.

According to experts, rate cut hopes and a slew of measures taken by the government to boost the ailing economy has boosted investor sentiment.

After four successive rate cuts this year, Reserve Bank of India (RBI) governor Shaktikanta Das on Thursday said that "there is more room" to do so given the growth deceleration and stable inflation that is likely to stay below target for a year or so.

Further, in a bid to boost lending, the government on Thursday asked public sector banks to hold loan melas in 400 districts to lend to desirable shadow banks and retail borrowers, and said no stressed loan account of MSMEs will be declared an NPA till March 2020.

Finance Minister Nirmala Sitharaman, who has since her maiden Budget on 5 July announced measures in three tranches for boosting the economy, held a meeting with heads of public sector banks (PSBs) on Thursday to review liquidity or money flow in the system and transmission of lower benchmark interest rates to borrowers.

The market is now awaiting cues from the GST Council which is scheduled to meet later in the day to decide on tax moderation, keeping in mind the revenue position and the need to boost sagging economic growth.

On the global front, resumption of trade talks between the US and China also buoyed market mood, traders said.

On Thursday, foreign portfolio investor sold shares worth a net of Rs 892.52 crore, while domestic institutional investors bought equities worth Rs 645.72 crore, provisional data showed.

(With PTI inputs)