BENGALURU - 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 .NSEI was up 2.27% at 11,532.00, as of 0415 GMT on Monday, while the benchmark BSE index .BSESN rose 2.28% at 38,904.70.

India's fear gauge, the Nifty volatility index .NIFVIX 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 BRIT.NS and ITC Ltd ITC.NS rose between 8% and 10% in early trading.

The Nifty auto index .NIFTYAUTO 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 .NSEBANK , 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 TCS.NS falling as much as 3.17%, while Infosys Ltd INFY.NS was down 3.7%.

The index was in the red on Monday after a brief rally last week even as the rupee INR=D4 traded strengthened by as much as 0.9% in the previous session.

(Reporting by Derek Francis in Bengaluru, Editing by Sherry Jacob-Phillips) ((derek.francis@thomsonreuters.com; +91-9986311363; Tweet to @derekfrancis089 LinkedIn: https://www.linkedin.com/in/derek-francis/;))