New Delhi: The market saw heavy gains on Wednesday soon after the government announced a 5 per cent hike in dearness allowances for central government employees and pensioners. The BSE Sensex skyrocketed 645 points and closed at 38,177 levels while the 50-stock Nifty index shot up 186 points and closed at 11,313 levels in the closing bell session. Nifty Bank index skyrocketed 1018 points and closed at 28,785 levels.

The decision of the Union Cabinet will be effective from July 2019 and is considered as a major relief for government employees. The Dearness Allowance is a part of the salary paid to public sector employees and pensioners by the government to mitigate the effect of inflation. This increase is based on the recommendations of the 7th Pay Commission.

About 50 lakh government employees and 62 lakh pensioners will benefit from the hike in dearness allowance to 17 per cent from 12 per cent earlier. This measure follows several other measures that the government took for auto, exports, real estate, NBFCs, 10 per cent cut in corporate tax rate etc.

On Wednesday, banking stocks witnessed fresh buying in the intraday trade as the BSE Bankex shot up 3.67 per cent. HDFC Bank, ICICI Bank, Kotak Mahindra Bank and HDFC contributed the most to the gains on the 30-scrip benchmark index. IndusInd Bank share price soared 5.45 per cent, shares of ICICI Bank skyrocketed 4.88 per cent, State Bank of India or SBI shares went northward 4.78 per cent, HDFC Bank stock price rose 3.44 per cent while Axis Bank counter went up near 2 per cent.