History of Stock Market Crashes In India
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History of Stock Market Crashes In India
In this post we'll go back in time and examine various known and unknown stock market crashes in India.
When is it said that the stock market crashed?
Every participant in the stock market has heard the term "stock market crash." But how many people understand what it really means?
In India, the first recorded stock market crash occurred in 1865.At the time, India had no formal stock exchange.Some Gujarati and Parsi traders would mutually trade stocks of Indian companies at the corner of Meadows Street and Rampart Row.
The American Civil War, which began in 1861, increased demand for cotton, which was a major export commodity for Indian companies at the time.The earnings from this boom were invested in the stock market, causing a buying and selling madness as well as an increase in speculation transactions.
The Civil War ended in April 1865, resulting in a decrease in cotton demand and a stock market crash.
The 1992 stock market crash may be the most well-known of all time. This was the first time that a major scam that include Rs. 5,000 crores or more had hit the Indian stock market. Mr. Harshad Mehta's planned security scam made contributions to the 1992 stock market crash. BSE fell by roughly 12%. The eventual bear market in the face of the scam lasted two years. It wiped out crores of rupees in the banking sector and is regarded as one of the worst time frames in Indian stock markets.
The 2004 stock market crash was caused by the sudden fall of the NDA government, which resulted in a 15.52% drop in the Sensex. In terms of percentage, it is the largest fall in Indian stock market history. The fall of the government stimulated UBS, an institutional investor, to sell the shares, fearing political instability.
The Sensex fell by around 1408 points on January 21, 2008, eroding investor wealth. This day is known as Black Monday, and analysts attribute the drop to a variety of factors.
Factors such as a drop in interest rates, a lack of investor confidence, the sale of shares, and the exit of FIIs and Foreign Hedge Funds from risky emerging markets The stock markets encountered a continuous crash throughout the year, and it took approximately two years for the market to recover and return to pre-crash levels in September 2010.
After a good run since the fall of 2008, the markets crashed again in 2015 against the backdrop of a falling Chinese economy. The Shanghai stock exchange fell by an unbelievable 8.5%, having caused the Indian stock market to fall well as. Other factors that led to this drop included poor income by major Indian companies.
By the beginning of 2016, the Indian stock markets had fallen by approximately 26% over an 11-month period.The increase in bank NPAs, the decline in crude oil prices, the slowing of the Chinese economy, and general global weakness and lack of investor confidence all contributed to this drop.
The rapid spread of COVID-19, that also resulted in a pandemic and globally lockdowns, caused a massive market crash in the global and Indian markets.The stock markets fell continuously for five days, marking the worst drop since the 2009 crash.This coincided with the Yes Bank crisis, which caused the strong BFSI sector to lose ground as well.
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In this post we'll go back in time and examine various known and unknown stock market crashes in India.
When is it said that the stock market crashed?
Every participant in the stock market has heard the term "stock market crash." But how many people understand what it really means?
- When the Nifty falls by more than 10% in 20 days.
- When the difference between a day's high and the next trading day's low is greater than 10%.
- When NIfty falls by more than 5% in a 9-day period.
- Crash of 1865
In India, the first recorded stock market crash occurred in 1865.At the time, India had no formal stock exchange.Some Gujarati and Parsi traders would mutually trade stocks of Indian companies at the corner of Meadows Street and Rampart Row.
The American Civil War, which began in 1861, increased demand for cotton, which was a major export commodity for Indian companies at the time.The earnings from this boom were invested in the stock market, causing a buying and selling madness as well as an increase in speculation transactions.
The Civil War ended in April 1865, resulting in a decrease in cotton demand and a stock market crash.
- Crash of 1992
The 1992 stock market crash may be the most well-known of all time. This was the first time that a major scam that include Rs. 5,000 crores or more had hit the Indian stock market. Mr. Harshad Mehta's planned security scam made contributions to the 1992 stock market crash. BSE fell by roughly 12%. The eventual bear market in the face of the scam lasted two years. It wiped out crores of rupees in the banking sector and is regarded as one of the worst time frames in Indian stock markets.
- Crash of 2004
The 2004 stock market crash was caused by the sudden fall of the NDA government, which resulted in a 15.52% drop in the Sensex. In terms of percentage, it is the largest fall in Indian stock market history. The fall of the government stimulated UBS, an institutional investor, to sell the shares, fearing political instability.
- Crash of 2008
The Sensex fell by around 1408 points on January 21, 2008, eroding investor wealth. This day is known as Black Monday, and analysts attribute the drop to a variety of factors.
Factors such as a drop in interest rates, a lack of investor confidence, the sale of shares, and the exit of FIIs and Foreign Hedge Funds from risky emerging markets The stock markets encountered a continuous crash throughout the year, and it took approximately two years for the market to recover and return to pre-crash levels in September 2010.
- Crash of 2015
After a good run since the fall of 2008, the markets crashed again in 2015 against the backdrop of a falling Chinese economy. The Shanghai stock exchange fell by an unbelievable 8.5%, having caused the Indian stock market to fall well as. Other factors that led to this drop included poor income by major Indian companies.
- Crash of 2016
By the beginning of 2016, the Indian stock markets had fallen by approximately 26% over an 11-month period.The increase in bank NPAs, the decline in crude oil prices, the slowing of the Chinese economy, and general global weakness and lack of investor confidence all contributed to this drop.
- Crash of 2020
The rapid spread of COVID-19, that also resulted in a pandemic and globally lockdowns, caused a massive market crash in the global and Indian markets.The stock markets fell continuously for five days, marking the worst drop since the 2009 crash.This coincided with the Yes Bank crisis, which caused the strong BFSI sector to lose ground as well.
If you found this content useful, please share and leave a comment.
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