Stock market crashes represent a moment when investors' wealth is destroyed and they suffer. They also represent opportunities and perseverance in times of few. A stock market crash occurs when an index of the market experiences a sharp and unexpected decline during a trading day or a few trading days.
What Sparked India's Worst Stock Market Crashes? — COVID-19
On January 30th, 2020, the first COVID-19 instance in India was located. In the weeks that followed, there was a COVID-19 panic. Based on the effects that the world's top manufacturer, China, would experience while combating the virus, this was decided. A silver lining for the Indian economy came in February when the price of oil fell to $30 per barrel globally as a result of a dispute between Russia and OPEC over oil. This was due to a disagreement about handling the decline in demand. The advantages of the price reduction should have been communicated to the final customers.
Yes, the Bank was on the verge of failing on March 6, which only made COVID-19's problems worse. This was because of the bad loans, which led to large NPAs and eventually forced government intervention in the bank. This improved the clarity of the picture of the failing banking industry. The stocks dropped by a thousand points on March 4 and March 6. Foreign institutional investors left the Indian markets to invest in stable developed nations as a result of lockdowns implemented across Europe and a state of "Emergency" declared in the US. The markets fell as the COVID-19 instances in India continued to get worse. The markets dropped a record 13.15% on March 23. The Indian market had never fallen as much as it did. The ensuing lockdown did not provide the stock markets with any relief. The markets had collapsed by April, wiping out profits from the previous three years.
The stock market crash of 1929, sometimes referred to as the Great Crash or the Wall Street crash, occurred in late October of that year and was marked by a rapid and sharp decline in stock values in the United States Dow Jones Industrial Average, a price-weighted stock market index of 30 illustrious companies listed on US stock exchanges in the United States, plunged precipitously over four business days, from Black Thursday (October 24th, 1929) to Black Tuesday (October 29th, 1929), representing a decline of 25% in stock prices. The top of the stock market occurred on September 3, 1929, when the Dow reached a value of 381.17.
The 2008 Financial Crisis and Crash
2008's severe market crisis doesn't need to be described. After the dot-com bubble burst in 2000, the seeds of this long-awaited financial crisis were sown, and the tragic 9/11 terror attack in 2001 further increased panic. To stimulate the economy, the Federal Reserve dropped the federal funds rate from 6.5% in May 2000 to 1% in June 2003. This was done to increase the amount of money accessible to consumers and companies. The outcome, as predicted, was an increase in housing values as borrowers benefited from the 1% mortgage rate.
2010's "Flash Crash"
Due to the flash crash that occurred on May 6, 2010, major US firms like Procter & Gamble and General Electric had their share values fall by billions of dollars. Although it occurred at a previously unheard-of rate and lasted for around 36 minutes (New York time), the stock market crash had just a minor impact on the US economy. It started at 2:32 PM (New York time).
2015's catastrophes
What took place?
On May 6, 2010, as the market opened, there were widespread worries about the Greek financial crisis and the upcoming UK general election. The flash crash started shortly after 2:30 p.m., and within ten minutes the Dow Jones had dropped by more than 300 points. Other US indices, such as the S&P 500 and US Tech 100 composite, were also impacted. The Dow lost another 600 points in less than another five minutes, at 2:47 p.m., bringing its total loss for the day to about 1000 points.
On January 6, 2015, the Sensex dropped 854 points to 26,987. On August 24, 2015, the BSE Sensex fell 1,624 points and the NSE fell 490 points. The Nifty closed at 7,809 points, with the indices ending the day at 25,741 points. Since the Yuan had been devalued two weeks earlier, a decline in currency rates and a quick selling of stocks in China and India were blamed for the fall, which was the result of a domino effect brought on by concerns about a Chinese slowdown. Shanghai's stock exchange likewise experienced a decline of 8.5%. Analysts offered a variety of additional justifications for the decline, including some Indian companies' disappointing first-quarter profitability, depressing management remarks that raised doubts about their rebound, and more.
In 2016, the Indian stock markets continued to decline. By the 16th of February 2016, the BSE had declined by 26% during the previous eleven months, losing 1607 points in four days. NPAs in Indian banks, "global deficiencies," and "global issues" were cited as the root causes. According to reports, FIIs sold shares worth Rs 17,318 crore in the four months from November 2015 to February 2016 as analysts grew concerned about China's economy and crude oil prices fell below $30 per barrel. Analysts contend that the fall on November 9, 2016, was caused by the Indian government's drive against "dirty money," which sparked frenetic trading
Conclusion
Several variables, including changes in the ruling parties, government measures (like demonetization), the ripple effects of global market crashes, and now even pandemics, have caused Indian stock market falls in the past. Although these crashes could seem to demonstrate the riskiness and volatility of the Indian markets, they could equally be viewed as evidence of the more challenging times they have survived. The markets in India today face more difficult challenges, and only time will tell how they will react to the 2020 environment's continual change.
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