The stock market is a tumultuous environment. As a result, there have been times when markets have fallen, causing investors to lose money quickly. A market crash is commonly characterized as a double-digit drop in indexes in a short period of time. While the markets have usually recovered, the effects of a catastrophe can sometimes persist for years.

Stock Market Crash In Year 1865

Long before the Bombay Stock Exchange was established, India had its first market crash. At the junction of Meadows Street and Rampart Row in 1865, some Gujarati and Parsi dealers would trade stocks of Indian enterprises.

Cotton, which was a key export product for Indian firms at the period, saw an increase in demand as the American Civil War began in 1861. This resulted in a dramatic and sudden increase in the price of cotton, which boosted the stocks of cotton-producing and exporting companies. Additionally, many who gained money selling cotton put their money into equities. The Civil War ended in April 1865, resulting in a drop in cotton demand and a stock market catastrophe. Many stockbrokers relocated to Dalal Street in 1874, and the Bombay Stock Market was founded in 1875 as Asia’s first stock exchange.

Stock Market Crash In Year 1982

What happened in 1982 was not necessarily a stock market crash, but it was certainly a fascinating event worth remembering. Many people are unaware of how Dhirubhai Ambani seized control of the situation in order to avoid a bear cartel from seizing power. Reliance Industries’ stock was selling at roughly Rs.131 in 1982. The share price decreased to Rs.121 in a short period of time. It’s worth noting that this happened during the time when stock markets had a 14-day settlement period. As a result, you may buy and sell shares over the course of 14 days, and it would be classified as an intraday trade today.

As a result, many people would short sell if they thought the price would decline and then purchase it back inside the settlement time, profiting. Bear cartels were also developing around this time. They’d pick a firm, short sell its shares to drive the price down, and then buy them back at a cheaper price to profit. A bear cartel shorted about 11 lakh shares of Reliance Industries, resulting in a decline in the company’s stock price. Mr. Dhirubhai Ambani knew that if this continues, small investors could lose a lot of money, and people’s faith in Reliance could be shaken.

As a result, he assembled Friends of Reliance brokers and asked them to begin buying Reliance stock. During the 14-day settlement period, this resulted in a lot of buying and selling of Reliance shares. Friends of Ambani demanded delivery of the bear cartel’s shares at the end of the settlement period. The cartel lacked the necessary shares, and Ambani refused to allow the stock exchanges to open until the trades were completed. As a result, the stock exchanges were closed for three days in a row.

Stock Market Crash In Year 1992

The Harshad Mehta scandal in 1992 caused the financial markets to plummet, with the Sensex plunging more than 50% in a year.

Harshad Mehta was renowned as the Indian stock market’s Big Bull. He used to buy stock in a company, inflate its price by raising demand, and then sell it to make a profit. To give you an example, he invested in ACC Limited shares and increased their value from Rs.200 to Rs.9000 a share in just 2-3 months. He then stole more than Rs.1000 crore from banks in order to buy stocks. When the scam was discovered, the stock market plummeted to new lows. The Sensex plummeted by nearly 2,000 points to around 2,500. There was also a two-year bear market as a result of it.

In May 2004, the Sensex dropped roughly 565 points in a single day, setting a new record. This was partly due to the National Democratic Alliance’s (NDA) unexpected defeat and a meltdown in the Indian economy’s rising industries. Some observers blamed the drop on UBS, a foreign institutional investor, selling shares at the same time that the country’s political landscape changed, raising doubts about the country’s ability to continue reforms.

Stock Market Crashes In Year 2008

Businesses, economies, and stock markets all suffered losses as a result of the financial crisis of 2008. The Sensex fell by about 1408 points on January 21, 2008, reducing investor wealth. This day is known as Black Monday, and analysts attribute the drop to a variety of factors, including:

  • A shift in investor confidence around the world
  • Fears that the US economy will enter a recession are prevalent.
  • A decrease in interest rates in the United States
  • In the commodity markets, there is a lot of volatility.
  • Foreign Institutional Investors (FIIs) and Hedge Funds (Hedge Funds) selling shares in emerging nations and investing in more stable developed markets
  • Extreme build-ups in derivatives holdings, resulting in margin calls and other issues.

The Sensex had declined from roughly 20,465 points to 9716 points by the end of 2008. In September 2010, Sensex finally crossed the 20,000-point milestone for the second time.

Stock Market Crashes In Year 2015

While the markets were recovering from the big slump in 2008, the Sensex plummeted 1624 points on August 24, 2015. Fears of a Chinese economic downturn were cited as the reason for this. This was owing to the Chinese Yuan’s depreciation a few weeks prior to the crisis, which caused a drop in the rates of other currencies and large stock selling volumes. A terrible monsoon season in India and weak earnings in the first quarter of the fiscal year exacerbated the situation in Indian markets.

Stock Market Crash In Year 2016

The stock markets all over the world had a difficult time in 2015-16. The Sensex in India continues to plummet. It had decreased roughly 26% in just eleven months by February 2016. This was partly related to Indian banks’ high levels of nonperforming assets (NPAs) and the overall global downturn. People were frantically selling when the government cracked down on black money via the Demonetization effort in November 2016, causing the Sensex to tumble by 6%. This was also accompanied by declines in other Asian markets.

Stock Market Crash In Year 2020

The recent COVID-19 outbreak, which culminated in a pandemic and global lockdowns, caused a massive market crash in global and Indian markets. Within a week of the World Health Organization (WHO) declaring the virus a pandemic, the Sensex fell from 42,273 to 28,288 points. This occurred at the same time as the Yes Bank disaster, forcing the formerly robust BFSI sector to lose ground.

Conclusion

As you can see, stock market crashes happen on a regular basis for a variety of causes. Stock markets are influenced by a wide range of circumstances, from wars to broker cartels, political instability to banking crises, government policy decisions, and health concerns. As a result, it’s crucial to remember that keeping an eye out for such events might help you predict market direction. We’d also want to point out that, while stock market crashes are unavoidable, recoveries have been steady. As a result, a long-term stock investment strategy can assist you in surviving stock market crashes.

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