(Representative image)

NEW DELHI: Equity indices on Wednesday finished with heavy gains after the government announced a 5 per cent hike in Dearness Allowance for central government employees and pensioners. The benchmark BSE Sensex soared 646 points or 1.72 per cent to close at 38,178; while the broader NSE Nifty moved 187 points or 1.68 per cent to settle at 11,313.

Investors also geared up for second-quarter corporate earnings. Company earnings are expected to receive a boost after the government slashed corporate taxes last month to 22 per cent from 30 per cent.

Tata Consultancy Services Ltd (TCS) is expected to report its results on Thursday, marking the start of the quarterly earnings season.

Major gainers on the 30-share BSE platform include IndusInd Bank, Bharti Airtel, State Bank of India, ICICI Bank, Mahindra & Mahindra and Tata Steel with their stocks rising as much as 5.72 per cent. On NSE, except for Nifty IT, all other sub-indices surged with Nifty Bank and Private Bank up as much as 3.67 per cent.

The government has raised the allowance by 5 per cent to 17 per cent from 12 per cent earlier.

This allowance will be paid from July 2019 and the DA hike to cost exchequer Rs 16,000 crore, Union minister Prakash Javadekar stated.

The increase is in accordance with the recommendations of the 7th Central Pay Commission.

Dearness Allowance or Dearness Relief is paid to central government employees and pensioners to adjust the cost of living and to protect their basic pay or pension from erosion in the real value. DA/DR is revised twice a year, i.e from January 1 and July 1.

