Stock market crashes in India


Since the founding of the Bombay stock exchange, stock markets in India, particularly in Mumbai have seen a number of booms as well as crashes.
This page lists these crashes and sharp falls in the two primary Indian stock markets, namely the BSE and NSE.
Financial Times terms a double-digit percentage fall in the stock markets over five minutes as a crash, while Jayadev et al. describe a stock market crash in India as a "fall in the NIFTY of more than 10% within a span of 20 days" or "difference of more than 10% between the high on a day and the low on the next trading day" or "decline in the NIFTY of more than 9% within a span of 5 days". As per the latter definition, the Nifty experienced 15 crashes during the period 2000 to 2008 with a number of them having occurred in the months of January, May and June 2008.

The crash of 1865

As per the Business Standard, India experienced its first stock market crash in 1865. Although the Bombay stock exchange had not yet been formed, Gujrati and Parsi traders often traded shares mutually at the junction of Rampart row and Meadows street. In the preceding years, speculation about the results of the American civil war had led to irrational increases of stocks of new Indian companies. Shares of the Back bay reclamation touched Rs. 50,000 and those of Bank of Bombay touched Rs. 2,850. Money made from cotton was pumped into the stock market driving prices of stocks higher. Banks loaned money to speculators further fuelling the bull run and wealthy merchants like Premchand Roychand dispensed advice that led to ordinary people placing their bets on shares.
On 16 November 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. However, the market crashed in May 1865 when the civil war ended, causing cotton prices to fall. Shares of the Backbay reclamation fell by 96% to under Rs. 2,000 and a number of merchants including Behramji Hormuzjee Cama went bankrupt. The crash not only led to a dwindling of the financial fortunes of many, it also led to a decrease of the city's population by 21% due to the closing down of many enterprises. On 1 July 1865, when hundreds of "time bargains" had matured, buyers and sellers alike defaulted leading to the burst of the bubble. A share of Bank of Bombay which had touched Rs 2,850 at the peak of the market slumped to just Rs 87 in the aftermath of the bust.

Crash of 1991

After economic liberalisation in India in 1991, the stock market saw a number of cycles of booms and busts, some related to 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% - its largest fall in history due to the Harshad Mehta scam.

Crash of 2006

On 18 May 2006, the BSE Sensex fell by 826 points to 11,391.

Crashes of 2007

During the financial crisis of 2007–2008, the stock markets in India fell on several occasions in 2007 as well as 2008. In 2007, there were five sharp falls in the stock markets.
On 6 July 2009, the Sensex fell by 869 points to 14,043.

Crashes of year 2015

The stock markets in India continued to fall in 2016. By 16 February 2016, the BSE had seen a fall of 26% over the past eleven months, losing 1607 points in four consecutive days of February. The reasons given for this included NPAs of Indian banks, "global weaknesses" and "global factors". In the four months from November 2015 to February 2016, FIIs were reported to have sold equities worth Rs 17,318 crore as, in the opinion of analysts, concerns grew over growth in China and as crude oil prices tumbled below $30 per barrel
On 9 November 2016, crashed by 1689 points, believed by analysts to be due to the crack down on black money by the Indian government, resulting in franctic selling. The sensex nosedived by 6% to 26,902 and the Nifty dropped by 541 points to 8002. These were said to be due to the demonetization drive by the Modi government. The Hindu was of the opinion that the weakening rupee and the US presidential election too had some bearing on the behavior of investors. The fall was concurrent with falls in other Asian stock markets including the Hang Seng, Nikkei and the Shanghai Composite. The S&P had also fallen by 4.45%.

Crashes of 2018

On 1 February 2020, as the FY 2020-21 Union budget was presented in the lower house of the Indian parliament, Nifty fell by over 3% while Sensex fell by more than 2%. The fall was also weighed by the global breakdown amid coronavirus pandemic centered in China.
On 28 February 2020, Sensex lost 1448 points and Nifty fell by 432 points due to growing global tension caused by coronavirus, which W.H.O said has a pandemic potential. Both BSE and NSE fell for the entire five days of the week ending with the worst weekly fall since 2009
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. This was done to ensure smooth functioning of the bank as it was struggling for couple of years to cope up with heavy pressure due to cleaning of bad loans.
On 9 March 2020, the Sensex fell by 1,941.67 points, while Nifty-50 broke down by 538 points. The fear of COVID-19 outbreak has created havoc all over the globe and India is no exception. Further, the recent Yes Bank crisis also made the markets fell. The markets ended in red with Sensex closing on 35,634.95 and Nifty-50 on 10,451.45.
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 amid World Health Organisation declaring Coronavirus outbreak as "pandemic". Sensex ended to 33-month low of 32778.14.
On 16 March 2020, Sensex plunged by 2,713.41 points, the second worst fall in its history. On the other hand, Nifty ended below 9200–mark at 9,197.40 due to global economic recession.
However, the Sensex continued to fall straight for 4–continuous days till 19 March 2020, losing 5815 points during the period.
On 23 March 2020, Sensex lost 3,934.72 points and Nifty plunges 1,135 points at 7610.25 as coronavirus-led lockdowns across the world triggered fears of a recession. These are now the lowest levels since 2016. It's witnessing the biggest weekly loss since October 2008, as the increasing number of coronavirus cases in India as well as globally.