Biggest Crashes in the history of Indian Stock Market
April 29, 2020
Since the founding of the Bombay Stock Exchange (BSE), Indian share market has seen a lot of boom as well as crashes.
We’ll look over a few of the noteworthy crashes of the Indian Share Market.
THE CRASH OF 1865
As per the Business Standard, India experienced its first stock market crash in 1865. Although the Bombay Stock Exchange was yet to be formed, but at that time the Gujarati and Parsi traders often traded shares mutually at the junction of Rampart row and Meadows street. In the preceding years the speculation about the results of the American civil war had led to irrational increases of stock of new Indian companies. Share of the Back Bay reclamation (Rs. 5,000) touched Rs 50,000 and those of Bank of Bombay (Rs. 500) touched Rs. 2850. Money made from cotton was pumped into the stock market driving prices of stocks higher. Banks loaned money to speculators supporting the bullish movement even more.
On November 16, 1864, the governor warned civil servants not to participate in the current frenzy. New companies were floated with new share issues publicized in the newspapers. Forward contracts further promoted speculative purchases. And finally the market crashed in May 1865 when the civil war ended, causing cotton prices to fall. The share of Bank of Bombay which had touched Rs. 2850 at the peak of the market fell to just Rs. 87.
CRASH OF 1991
After economic liberalization in 1991, the stock market saw a number of booms and busts, some related to the scams such as those engineered by players such as Harshad Mehta and Ketan Parekh, some due to global events and a few due to circular trading, rigging of prices and the irrational exuberance of investors leading to bubbles that finally burst.
CRASH OF 1992
On 28 April 1992, the BSE experienced a fall of 12.77% – it is the largest fall in history (in terms of percentage) due to the Harshad Mehta Scam.
Crash of 2006
On 18 May 2006, the BSE Sensex fell by 826 points to 11391.
Crashes of 2007
During the financial crisis of 2007-2008
- 2 April 2007: The Sensex fell by 617 points to 12,455 during the course of the day.
- 1 August 2007: The Sensex continued to fall and finally settles at 14936 while the nifty fell by 183 points to 4,346
- 16 August 2007: The Sensex fell a good 500 points for most of the trading session.
- 21 November 2007: The index tumbled to a new low of 18515.
- 17 December 2007: As per rediff the index fell down 865 points from the day’s open.
CRASHES OF 2020
- On 1 February 2020, as the FY 2020-21 Union Budget was presented in the lower house of Indian Parliament, Nifty fell by over 3% while Sensex fell by more than 2%.
- On 28 February 2020, Sensex lost 1448 points and nifty fell by 432 points due to growing global tension cause by Corona Virus.
- On March 4 and 6, markets fell by around 1000 points and several crores of wealth was wiped out. On 6 March 2020, Yes Bank was taken over by RBI under its management for reconstruction and will be merged with SBI.
- On 9 March 2020, the Sensex fell by 1941.67 points, while Nifty-50 broke down by 538 points. The fear of COVID-19 outbreak has created havoc all over the glove and India is no exception.
- On 12 March 2020, the Sensex fell by 2919.26 points, the worst continuation of the week in the history while Nifty-50 broke down by 868.25 points.
- On 23 March 2020, Sensex lost 3934.72 points and Nifty plunges 1135 points, as coronavirus-led lockdown triggered fears of a recession.