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Stock market crashes in India: Difference between revisions
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==The crash of 1865== | ==The crash of 1865== | ||
As per the ''[[Business Standard]]'', India experienced its first stock market crash in 1865.<ref name=" | As per the ''[[Business Standard]]'', India experienced its first stock market crash in 1865.<ref name="crash1965">{{cite news|last1=Mampatta|first1=Sachin|last2=Bhayani|first2=Rajesh|title=How Abraham Lincoln triggered India's first stock market crash|url=http://www.business-standard.com/article/beyond-business/150-years-later-115071001354_1.html|accessdate=3 February 2018|publisher=Business Standard|date=22 July 2015}}</ref> Although the Bombay stock exchange had not yet been formed, [[Gujarati people|Gujarati]] and [[Parsi]] traders often traded shares mutually at the junction of [[Kala Ghoda|Rampart row]] and Meadows street. In the preceding years, [[speculation]] about the results of the [[American Civil War]] had led to [[Irrational exuberance|irrational increases]] of stocks of new Indian companies. Shares of the [[Back Bay (Mumbai)|Back Bay reclamation]] (face value Rs. 5,000) touched Rs. 50,000 and those of [[Bank of Bombay]] (face value Rs.500) 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.<ref name="wacha">{{cite book|last1=Wacha|first1=Dinshaw|title=A Financial Chapter In The History Of Bombay City|year=1910|publisher=A.J.Combridge And Company.|url=https://archive.org/details/financialchapter031192mbp}}</ref> | ||
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.<ref name="dwi">{{cite book|last1=Dwivedi|first1=Sharada|last2=Mehrotra|first2=Rahul|title=Bombay: the cities within}}</ref> 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.<ref name="ox">{{cite book|last1=Tripathi|first1=Dwijendra|title=The Oxford History of Indian Business.|year=2004|url=https://archive.org/details/oxfordhistoryofi2004trip|url-access=registration|publisher=Oxford university press|location=Mumbai|isbn=978-0-19-565968-9}}</ref><ref>{{Cite journal|last=Visana|first=Vikram|title=Vernacular Liberalism, Capitalism, and Anti-Imperialism in the Political Thought of Dadabhai Naoroji|date=September 2016|url=https://www.cambridge.org/core/journals/historical-journal/article/abs/vernacular-liberalism-capitalism-and-antiimperialism-in-the-political-thought-of-dadabhai-naoroji/C5A6732A37A4C7330ECBDA39C9C2B6F9|journal=The Historical Journal|language=en|volume=59|issue=3|pages=775–797|doi=10.1017/S0018246X15000230|s2cid=155747116|issn=0018-246X}}</ref> On 1 July 1865, when hundreds of "time bargains" had matured (as the future contracts were then known), 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.<ref name="hindu">{{cite news|last1=Ram Prasad|first1=Bandi|title=BSE - from Banyan tree to biggest bourse|url=http://www.thehindubusinessline.com/bline/2004/04/27/stories/2004042700190600.htm|accessdate=3 February 2018|publisher=Hindu Business Line}}</ref> | 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.<ref name="dwi">{{cite book|last1=Dwivedi|first1=Sharada|last2=Mehrotra|first2=Rahul|title=Bombay: the cities within}}</ref> 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.<ref name="ox">{{cite book|last1=Tripathi|first1=Dwijendra|title=The Oxford History of Indian Business.|year=2004|url=https://archive.org/details/oxfordhistoryofi2004trip|url-access=registration|publisher=Oxford university press|location=Mumbai|isbn=978-0-19-565968-9}}</ref><ref>{{Cite journal|last=Visana|first=Vikram|title=Vernacular Liberalism, Capitalism, and Anti-Imperialism in the Political Thought of Dadabhai Naoroji|date=September 2016|url=https://www.cambridge.org/core/journals/historical-journal/article/abs/vernacular-liberalism-capitalism-and-antiimperialism-in-the-political-thought-of-dadabhai-naoroji/C5A6732A37A4C7330ECBDA39C9C2B6F9|journal=The Historical Journal|language=en|volume=59|issue=3|pages=775–797|doi=10.1017/S0018246X15000230|s2cid=155747116|issn=0018-246X}}</ref> On 1 July 1865, when hundreds of "time bargains" had matured (as the future contracts were then known), 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.<ref name="hindu">{{cite news|last1=Ram Prasad|first1=Bandi|title=BSE - from Banyan tree to biggest bourse|url=http://www.thehindubusinessline.com/bline/2004/04/27/stories/2004042700190600.htm|accessdate=3 February 2018|publisher=Hindu Business Line}}</ref> | ||
== Crash of 1982 == | == Crash of 1982 == | ||
In 1982,the bear cartel of Bengal started short selling shares targeted primarily of Reliance. Stocks around | In 1982, the bear cartel of Bengal started short selling shares targeted primarily of Reliance. Stocks around 110,0000 was short sold. The value of shares decreased significantly. The BSE was shut down for three consecutive days.{{Citation needed|date=September 2021}} | ||
==Crash of 1991== | ==Crash of 1991== | ||
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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. | 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. | ||
* 2 April 2007: The Sensex fell by 617 points to 12,455 though during the course of the day, it fell further. As per the analysts at Rediff, "The Sensex opened with a huge negative gap of 260 points at 12,812 following the Reserve Bank of India [Get Quote] decision to hike the cash reserve ratio and repo rate. Unabated selling, mainly in auto and banking stocks, saw the index drift to lower levels as the day progressed. The index tumbled to a low of 12,426 before finally settling with a | * 2 April 2007: The Sensex fell by 617 points to 12,455 though during the course of the day, it fell further. As per the analysts at Rediff, "The Sensex opened with a huge negative gap of 260 points at 12,812 following the Reserve Bank of India [Get Quote] decision to hike the cash reserve ratio and repo rate. Unabated selling, mainly in auto and banking stocks, saw the index drift to lower levels as the day progressed. The index tumbled to a low of 12,426 before finally settling with a nifty loss of 617 points (4.7%) at 12,455".<ref name="rediff"/> | ||
* 1 August 2007: The Sensex continued to fall and finally settled at 14,936 while the nifty fell by 183 points to 4,346. As per Rediff, "The Sensex opened with a negative gap of 207 points at 15,344 amid weak trends in the global market and slipped deeper into the red. Unabated selling across-the-board saw the index tumble to a low of 14,911. The Sensex finally ended with a | * 1 August 2007: The Sensex continued to fall and finally settled at 14,936 while the nifty fell by 183 points to 4,346. As per Rediff, "The Sensex opened with a negative gap of 207 points at 15,344 amid weak trends in the global market and slipped deeper into the red. Unabated selling across-the-board saw the index tumble to a low of 14,911. The Sensex finally ended with a nifty loss of 615 points at 14,936. The NSE Nifty ended at 4,346, down 183 points. This was the third biggest loss in absolute terms for the index (thus far)".<ref name="rediff"/> | ||
* 16 August 2007: The Sensex continue to languish a good 500 points down for most of the trading session, finally closing at a low of 14,358, a loss of 643 points.<ref name="rediff"/> | * 16 August 2007: The Sensex continue to languish a good 500 points down for most of the trading session, finally closing at a low of 14,358, a loss of 643 points.<ref name="rediff"/> | ||
* 18 October 2007: While activity remained normal in the morning, during noon trades, the Sensex tumbled down as the intensity of selling increased towards the closing bell of the BSE. The Sensex tumbled all the way to a low of 17,771 - down 1,428 points from the same day's high. It finally settled on 17,998 with a loss of 717 points (3.8%). The Nifty too lost 208 points and closed at 5,351.<ref name="rediff"/> | * 18 October 2007: While activity remained normal in the morning, during noon trades, the Sensex tumbled down as the intensity of selling increased towards the closing bell of the BSE. The Sensex tumbled all the way to a low of 17,771 - down 1,428 points from the same day's high. It finally settled on 17,998 with a loss of 717 points (3.8%). The Nifty too lost 208 points and closed at 5,351.<ref name="rediff"/> | ||
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==Crashes of 2008== | ==Crashes of 2008== | ||
* on 21 Jan 2008, the BSE fell by | * on 21 Jan 2008, the BSE fell by 1,408 points to 17,605 leading to one of the largest erosions in investor wealth.<ref>{{cite news|title=Biggest-ever loss: Sensex plunges 1,400 points|url=http://money/2008/jan/21sensex.htm|accessdate=3 February 2018|publisher=Rediff abroad via Business Standard|date=21 January 2008}}</ref> The BSE stopped trading for a while at 2:30 pm due to a technical snag although its circuit filter allows swings of up to 15% before stopping trading for an hour.<ref>{{cite news|title=Trading halted: BSE asked to clarify|url=http://www.rediff.com/money/2008/jan/21mkt.htm|accessdate=3 February 2018|publisher=Rediff India Abroad|date=21 January 2008}}</ref><ref>{{cite web|title=Circuit breakers at NSE|url=https://nseindia.com/products/content/equities/equities/circuit_breakers.htm|website=nseindia.com|publisher=NSE|accessdate=3 February 2018}}</ref> Referred to in the media as "Black Monday", the fall was blamed by analysts at HSBC mutual fund and JP Morgan on a large variety of reasons including change in the global investment climate, fears of United States' economy going into a recession, FIIs and foreign [[hedge funds]] selling in order to reallocate their funds from risky emerging markets to stable developed markets, a cut in US interest rates, global bourses (often referred to as event related volatility), volatility in commodities markets, a combination of global and local factors ("...other emerging markets were down nearly 20% so India is playing catch-up..."), huge build-ups in derivatives positions leading to margin calls and that many IPOs had sucked out liquidity from the primary market into the secondary market.<ref>{{cite news|title=Investors lose over $300 bn in 6 days|url=http://www.rediff.com/money/2008/jan/21invest.htm|accessdate=3 February 2018|publisher=Rediff abroad business|date=21 January 2008}}</ref> HSBC mutual funds analysts predicted further falls in the stock market, and the analysts at JP Morgan were of the opinion that market would fall a further 10-15%.<ref>{{cite news|title=Why did the stock market crash? Analysts answers and readers comments|url=http://specials.rediff.com/money/2008/jan/21sld1.htm|accessdate=3 February 2018|publisher=Rediff news|date=21 January 2008}}</ref><ref>{{cite news|title=Market crash: Have you been hit? - Analysis and readers comments|url=http://www.rediff.com/money/2008/jan/21msg.htm|accessdate=3 February 2018|publisher=Rediff India Abroad|date=21 January 2008}}</ref><ref>{{cite news|title=Market correction? What's that?|url=http://www.rediff.com/money/2008/jan/21correct.htm|accessdate=3 February 2018|publisher=Rediff|date=21 January 2008}}</ref> | ||
* On the next day on 22 January 2008, the Sensex again fell by 875 points to 16,729.Jan 22, 2008: The Sensex saw its biggest intra-day fall on Tuesday when it hit a low of 15,332, down 2,273 points. However, it recovered losses and closed at a loss of 875 points at 16,730. The Nifty closed at 4,899 at a loss of 310 points. Trading was suspended for one hour at the Bombay Stock Exchange after the benchmark Sensex crashed to a low of 15,576.30 within minutes of opening, crossing the circuit limit of 10 per cent. | * On the next day on 22 January 2008, the Sensex again fell by 875 points to 16,729.Jan 22, 2008: The Sensex saw its biggest intra-day fall on Tuesday when it hit a low of 15,332, down 2,273 points. However, it recovered losses and closed at a loss of 875 points at 16,730. The Nifty closed at 4,899 at a loss of 310 points. Trading was suspended for one hour at the Bombay Stock Exchange after the benchmark Sensex crashed to a low of 15,576.30 within minutes of opening, crossing the circuit limit of 10 per cent. | ||
* On 11 Feb 2008, the Sensex fell by a further 834 points to 16,630. | * On 11 Feb 2008, the Sensex fell by a further 834 points to 16,630. | ||
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On 1 February 2020, as the [[2020 Union budget of India|FY 2020-21 Union budget]] was presented in the [[Lok Sabha|lower house]] of the Indian parliament, Nifty fell by over 3% (373.95 points) while Sensex fell by more than 2% (987.96 points). The fall was also weighed by the global breakdown amid [[COVID-19 pandemic|coronavirus pandemic]] centered in China.<ref>{{cite news |title=Stock market at odds with Union Budget 2020; SENSEX slips over 1,000 pts, NIFTY at 11,643 |url=https://www.dnaindia.com/business/report-stock-market-at-odds-with-union-budget-2020-sensex-slips-over-1000-pts-nifty-at-11643-2811660 |accessdate=1 February 2020 |work=[[DNA India]] |date=1 February 2020 |language=en}}</ref> | On 1 February 2020, as the [[2020 Union budget of India|FY 2020-21 Union budget]] was presented in the [[Lok Sabha|lower house]] of the Indian parliament, Nifty fell by over 3% (373.95 points) while Sensex fell by more than 2% (987.96 points). The fall was also weighed by the global breakdown amid [[COVID-19 pandemic|coronavirus pandemic]] centered in China.<ref>{{cite news |title=Stock market at odds with Union Budget 2020; SENSEX slips over 1,000 pts, NIFTY at 11,643 |url=https://www.dnaindia.com/business/report-stock-market-at-odds-with-union-budget-2020-sensex-slips-over-1000-pts-nifty-at-11643-2811660 |accessdate=1 February 2020 |work=[[DNA India]] |date=1 February 2020 |language=en}}</ref> | ||
On 28 February 2020, Sensex lost 1448 points and Nifty fell by 432 points due to growing global tension caused by coronavirus,<ref>{{cite web |date=28 February 2020 | accessdate=28 February 2020| url=https://www.business-standard.com/article/markets/market-live-markets-sensex-nifty-bse-nse-coronavirus-indusind-bank-120022800118_1.html}}</ref> which W.H.O said has a pandemic potential.<ref>https://www.bbc.com/news/world-51665631</ref> Both BSE and NSE fell for the entire five days of the week ending with the worst weekly fall since 2009 <ref>https://www.moneycontrol.com/news/business/markets/market-live-indian-indices-pidilite-dic-india-rites-bob-hpcl-gtpl-hathway-4985151.html</ref> | On 28 February 2020, Sensex lost 1448 points and Nifty fell by 432 points due to growing global tension caused by coronavirus,<ref>{{cite web |date=28 February 2020 | accessdate=28 February 2020| url=https://www.business-standard.com/article/markets/market-live-markets-sensex-nifty-bse-nse-coronavirus-indusind-bank-120022800118_1.html| title=Sensex tanks 1,448 PTS on coronavirus jitters; worst weekly fall in 10 yrs}}</ref> which W.H.O said has a pandemic potential.<ref>{{Cite news|url=https://www.bbc.com/news/world-51665631|title=Coronavirus: Outbreak at 'decisive point' as WHO urges action|work=BBC News|date=27 February 2020}}</ref> Both BSE and NSE fell for the entire five days of the week ending with the worst weekly fall since 2009 <ref>{{Cite web|url=https://www.moneycontrol.com/news/business/markets/market-live-indian-indices-pidilite-dic-india-rites-bob-hpcl-gtpl-hathway-4985151.html|title = Mayhem on D-St as Nifty Registers Worst Weekly Loss Since 2009; Sensex Falls 1,448 PTS}}</ref> | ||
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 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. | ||
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On 12 March 2020, the Sensex fell by 2919.26 points (-8.18%), the worst continuation of the week in the history while Nifty-50 broke down by 868.2 points (-8.30%) amid [[World Health Organization|World Health Organisation (WHO)]] declaring Coronavirus outbreak as "[[pandemic]]".<ref>{{Cite web|url=https://www.theverge.com/2020/3/11/21156325/coronavirus-pandemic-who-declares-covid-19-outbreak-global-h1n1|title=WHO declares the outbreak of the new coronavirus is a pandemic|last=Wetsman|first=Nicole|date=2020-03-11|website=The Verge|language=en|access-date=2020-03-12}}</ref> Sensex ended to 33-month low of 32778.14.<ref>{{Cite web|url=https://www.newsnation.in/business/news/sensex-crashes-291926-points-to-end-at-3277814-256127.html|title=Closing Bell: Sensex Crashes 2,919.26 Points To End At 32,778.14, Nifty Sinks 868.25 Points|website=News Nation|language=en|access-date=2020-03-12}}</ref> | On 12 March 2020, the Sensex fell by 2919.26 points (-8.18%), the worst continuation of the week in the history while Nifty-50 broke down by 868.2 points (-8.30%) amid [[World Health Organization|World Health Organisation (WHO)]] declaring Coronavirus outbreak as "[[pandemic]]".<ref>{{Cite web|url=https://www.theverge.com/2020/3/11/21156325/coronavirus-pandemic-who-declares-covid-19-outbreak-global-h1n1|title=WHO declares the outbreak of the new coronavirus is a pandemic|last=Wetsman|first=Nicole|date=2020-03-11|website=The Verge|language=en|access-date=2020-03-12}}</ref> Sensex ended to 33-month low of 32778.14.<ref>{{Cite web|url=https://www.newsnation.in/business/news/sensex-crashes-291926-points-to-end-at-3277814-256127.html|title=Closing Bell: Sensex Crashes 2,919.26 Points To End At 32,778.14, Nifty Sinks 868.25 Points|website=News Nation|language=en|access-date=2020-03-12}}</ref> | ||
On 16 March 2020, Sensex plunged by 2,713.41 points (around 8%), 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.<ref>{{Cite web|url=https://www.firstpost.com/business/sensex-plummets-over-2700-points-to-close-at-31390-nifty-below-9200-mark-indusind-bank-among-top-losers-8154531.html|title=Sensex plummets over 2,700 points to close at 31,390, Nifty below 9,200-mark; IndusInd Bank among top losers|website=Firstpost|access-date=2020-03-17}}</ref> | On 16 March 2020, Sensex plunged by 2,713.41 points (around 8%), 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.<ref>{{Cite web|url=https://www.firstpost.com/business/sensex-plummets-over-2700-points-to-close-at-31390-nifty-below-9200-mark-indusind-bank-among-top-losers-8154531.html|title=Sensex plummets over 2,700 points to close at 31,390, Nifty below 9,200-mark; IndusInd Bank among top losers|website=Firstpost|date=16 March 2020|access-date=2020-03-17}}</ref> | ||
However, the Sensex continued to fall straight for four–continuous days till 19 March 2020, losing 5815 points during the period. | However, the Sensex continued to fall straight for four–continuous days till 19 March 2020, losing 5815 points during the period. | ||
On 23 March 2020, Sensex lost 3,934.72 points (13.15%) and Nifty plunges 1,135 points (12.98%) at 7610.25<ref>{{Cite web|url=https://www.thequint.com/news/business/daily-stock-markets-update-23-march-2020-coronavirus|title=Markets Close in Red: Sensex, Nifty End at Four-Year Low|date=2020-03-23|website=The Quint|language=en|access-date=2020-03-23}}</ref> 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 [[COVID-19 pandemic in India|coronavirus cases in India]] as well as globally.<ref>{{Cite web|url=https://www.firstpost.com/business/stock-market-today-live-updates-share-market-latest-news-bse-sensex-nifty-coronavirus-trading-halted-45-minutes-8177821.html|title=Stock Market Today LATEST Updates: Sensex ends day's session tanking over 3, | On 23 March 2020, Sensex lost 3,934.72 points (13.15%) and Nifty plunges 1,135 points (12.98%) at 7610.25<ref>{{Cite web|url=https://www.thequint.com/news/business/daily-stock-markets-update-23-march-2020-coronavirus|title=Markets Close in Red: Sensex, Nifty End at Four-Year Low|date=2020-03-23|website=The Quint|language=en|access-date=2020-03-23}}</ref> 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 [[COVID-19 pandemic in India|coronavirus cases in India]] as well as globally.<ref>{{Cite web|url=https://www.firstpost.com/business/stock-market-today-live-updates-share-market-latest-news-bse-sensex-nifty-coronavirus-trading-halted-45-minutes-8177821.html|title=Stock Market Today LATEST Updates: Sensex ends day's session tanking over 3,90000 points, Nifty plunges 1,135 points; Axis Bank, IndusInd, Bajaj Finance among top losers|website=Firstpost|date=23 March 2020|access-date=2020-03-23}}</ref> | ||
== See also == | == See also == | ||