Monday Mayhem On Dalal Street: From Financial Crisis To Covid, Five Worst Stock Market Crashes In India
The Nifty 50 saw its worst open on Monday since March 2020, falling 5.07% to the day’s low of 21,743.65. The Sensex dropped 3,939.68 points to an intraday low of 71,425.01.
The Indian benchmarks, Nifty 50 and Sensex, registered a sharp fall on Monday, April 7, extending the decline for the third day amid the global turmoil triggered by US President Donald Trump's policy announcement.
The Nifty 50 saw its worst open on Monday since March 2020, falling 5.07% to the day’s low of 21,743.65. The Sensex dropped 3,939.68 points to an intraday low of 71,425.01. This sharp decline followed the biggest drop in Asian markets in 14 years, triggered by a slump in Wall Street. The downturn came following the concerns over the US President Trump’s tariff policies against trade partners, triggering fears of a global trade war.
On April 2, Trump imposed sweeping tariffs on over 180 nations, as he claimed that trade imbalances are hurting the US economy. India was among the nations to be impacted by the move. The situation has rattled global investor confidence, leading to sharp market corrections across various economies.
While the current situation may seem overwhelming for new investors, India has endured even worse market crashes in the past. From the Harshad Mehta scam to financial crises, here are the five worst stock market crashes in Indian history:
1. Harshad Mehta Scam (1992)
The 1992 Harshad Mehta scam had triggered a massive stock market crash. Mehta was involved in market manipulation carried out using fraudulent funds. Once the scam was exposed, the Sensex plunged 56%, from 4,467 in April 1992 to 1,980 by April 1993. The market took nearly two years to recover and stabilise from the fallout.
2. Asian Financial Crisis (1997)
The 1997 Asian Financial Crisis began in Thailand when the country devalued its currency. This triggered economic instability across the Southeast Asia region and subsequently led to significant global spillover. By December 1997, India's Sensex fell over 28% from 4,600 to 3,300. It took about a year for the Indian market to recover from this shock.
3. Dot-com Bubble Burst (2000)
The Sensex plunged from 5,937 in Feb. 2000 to 3,404 in Oct. 2001, marking a loss of 43%. This was during the aftermath of the dot-com bubble burst or the collapse of technology sector stocks. During this time, the Nasdaq index crashed by 77%, and subsequently, many cash-strapped internet startups went insolvent. After this crash, investors began shifting their focus to other sectors besides tech.
4. 2008 Financial Crisis
The 2008 Global Financial Crisis was sparked by the Lehman Brothers' collapse and the subprime mortgage crisis in the US. This resulted in a global recession, impacting economies worldwide. On Jan. 21, 2008, the Sensex fell by 1,408 points. By October, it had dropped over 60%, from 21,206 to around 8,100 points. The Sensex ended 2008 at 9,716, and crossed the 20,000-mark again in Sept. 2010.
5. Covid-19 Crash in 2020
The outbreak of the Covid-19 pandemic significantly impacted the Indian stock markets in 2020. On Mar. 23, 2020, the Sensex crashed by 3,935 points, or 13.2%, as India announced a nationwide lockdown. The Yes Bank crisis also contributed to the wealth wipeout. The situation gradually reversed in the form of a V-shaped recovery by late 2020.
