Bears vs Bulls: Harshad Mehta scam to COVID-19—Top 7 biggest stock market crashes in India’s history

Stock market crash: The Indian stock market faces the heat of domestic and global triggers after extending its losing streak for the third consecutive week and reaching its lowest levels since June 2024. Domestic equity benchmarks, Sensex and Nifty 50, logged their worst day in around five months on February 28, with the NSE benchmark posting its longest monthly losing streak in the last 29 years (since 1996), dragged by foreign capital outflows amid US tariff fears.

However, selling pressure from external triggers is nothing new for the Indian stock market. History tells us that the frontline indices have faced far worse crashes in the last 30 years of trading. From enduring the brunt of massive banking scams to global economic slowdowns, Sensex and Nifty 50 have witnessed stellar highs, corrections, and recoveries, driven by the resilience of domestic investors amid India’s strong macroeconomic fundamentals. 

According to D-Street analysts, India’s long-term growth story has supported the stock market sentiment. Corrections and breathers are most common after logging record highs. The BSE benchmark is down 14.86 per cent from its peak of 85,978.25 on September 27, not too long ago. Coming to historical data, let’s take a look at the top seven biggest stock market crashes in India’s history:

Top 7 biggest stock market crashes in India’s financial market history

1.Harshad Mehta Scam (1992)

The stock market crash was triggered by the Harshad Mehta securities scam when the stockbroker manipulated stock prices using fraudulent funds. The Sensex shed 56 per cent from its last peak then, falling from 4,467 in April 1992 to 1,980 by April 1993. The crash took nearly two years to stabilise. 

2.Asian Financial Crisis (1997)

The market crash was caused due to regional currency collapses when the Sensex plunged from 4,600 to 3,300 in December 1997. This took one year for the index to recover and log new highs.