From Harshad Mehta Scam to Black Monday: Top 5 Biggest Stock Market Crashes in India’s History

Introduction

The Indian stock market, known for its volatility, has experienced several significant crashes, leaving deep marks on the economic landscape. These events have shaped investor behavior and influenced trading practices across the country. This blog will detail the top five biggest stock market crashes in India, including the infamous Harshad Mehta scam and the catastrophic Black Monday.

1. The Harshad Mehta Scam (1992)

Marked by an unprecedented level of deceit, the Harshad Mehta scam was one of the first major stock market scandals in India. Mehta manipulated stock prices by exploiting loopholes in the banking system, leading to a market crash that erased countless investors’ savings. The ramifications of this event still resonate in regulatory practices today.

2. The Ketan Parekh Scam (2001)

Following in the footsteps of Harshad Mehta, the Ketan Parekh scam escalated the tension in the already fragile market. Parekh’s Ponzi scheme involved borrowing money to drive up stock prices artificially, resulting in a devastating collapse in 2001. This event highlighted the need for stricter financial oversight.

3. Black Monday (2008)

Another pivotal moment in India’s stock market history was Black Monday, which occurred during the global financial crisis. Triggered by various international factors, the BSE Sensex plummeted by nearly 2,000 points in just one day. This crash served as a sobering reminder of the market’s susceptibility to global influences.

4. The 2011 Crash

In 2011, increasing inflation and political uncertainty led to another major downturn in the stock market. Investors showed panic, ultimately causing sharp declines across major indexes. This period was marked by significant fear and uncertainty among market players.

5. The COVID-19 Pandemic (2020)

The recent COVID-19 pandemic brought unprecedented challenges to the global economy, and India was no exception. Stock markets experienced significant drops as lockdowns took hold and business activities ground to a halt. Recovery has been gradual, but this crash stands as a testament to market resilience.

Conclusion

From the Harshad Mehta scam to the disruptions caused by the COVID-19 pandemic, India’s stock market has endured a series of impactful crashes. Understanding these historical events is crucial for investors and policymakers alike, as they hold valuable lessons for the future of the financial market.