The Indian stock market saw one of its largest declines since June 2024 on Monday, April 7. Investor confidence declined as the Nifty 50 dropped below 21,750 and the Sensex dropped by almost 4,000 points.
Although stock markets fluctuate from time to time, some days are far worse than others. The Indian stock market saw one of its largest declines since June 2024 on Monday, April 7. Investor confidence declined as the Nifty 50 dropped below 21,750 and the Sensex dropped by almost 4,000 points.
Fears of a US recession, which were spurred by a worldwide trade war brought on by reciprocal tariffs imposed by US President Donald Trump, caused the dip. Within minutes, the market capitalization of businesses listed on the BSE fell by around Rs 16 lakh crore. The Volatility Index, or India VIX, increased by more than 56%.
Let’s take a brief look at five such one-day market crashes that occurred in India and had a long-lasting effect.
The 1992 Harshad Mehta Scam Crash :
The first significant stock market shock in India was the Harshad Mehta Scam. Stockbroker Harshad Mehta manipulated stock prices by taking advantage of weaknesses in the financial system. In April 1992, the scam—which included more than Rs 4,000 crore—was made public.
The Sensex fell 570 points, or 12.7%, in a single day on April 28, 1992. At the time, it was the worst fall. As a result, market regulation underwent significant adjustments, and SEBI’s authority to stop these scams was bolstered.
The 2001 Ketan Parekh scam crash :
A few years later, Indian markets were rocked by yet another market manipulation controversy. This time, a broker named Ketan Parekh was responsible for driving up the price of particular stocks. When the fraud first surfaced in March 2001, investors were alarmed.
The Sensex fell 176 points,or 4.13%,on March 2, 2001. The recent earthquake in Gujarat and poor worldwide signals exacerbated the decline, which occurred just after the dot-com crash.
THE 2004 ELECTION RESULTS CRASH :
Unexpected election results rocked the markets in May 2004. The NDA, which was pushing for drastic economic reforms, lost to the UPA, which was led by the Congress party.
The Sensex fell 11.1% in a single day on May 17, 2004. As panic-selling seized markets, trading was halted twice. After the new government promised investors that changes would continue, the markets eventually stabilized.
The 2008 Global Financial Crisis and Crash :
Global shockwaves were produced by the 2008 global financial crisis, which was brought on by the failure of Lehman Brothers in the United States. When international investors started withdrawing their funds, India was also impacted.
The Sensex dropped 1,408 points, or 7.4%, on January 21, 2008. It continued to decline during the ensuing months, dropping by about 60% from its peak. India had one of its worst bear markets ever.
2020 COVID-19 PANDEMIC CRASH :
In addition to causing a health disaster, the early 2020 COVID-19 outbreak also sparked economic fear. A market crisis resulted from fears of a complete standstill in economic activity following India’s announcement of a statewide lockdown.
The Sensex dropped 3,935 points, or 13.2%, on March 23, 2020. However, as soon as the RBI and government intervened with support measures, the markets swiftly recovered.