The Indian market crashes on the 28th of October 2021. Possible reasons for this slide can be due to the high valuation of the market, lack of investor participation in the equity market, FII, MF, DII selling. Whatever be the apt reason, equity markets are nervous at these levels. Nifty 50 stocks saw a correction of 10% – 15% from their 52 weeks high. The fall was nearly two percentage. The short term positions are turning tomato red amid the fear of the return of the bear market.
Indian Market Crashes
Let us look at some of the falls that the Nifty 50 experienced in its relatively short span which began in 1996.
- From the high of Rs 1203 the indian market in June 1996 to a low of Rs 775 in December 1996
- From the high of Rs 1818 in February 2000 to a low of Rs 850 in September 2001
- Market high of Rs 2014 in January 2004 to a low of Rs 1292 in May 2004
- The year 2005, 2006 and 2007 witnessed a bull run
- From the high of Rs 6357 in June 2008 to a low of Rs 2250 in October 2008
- Again we saw a decadal bull run in the period from 2008 up until 2019
- From the high of Rs 12430 in January 2020 to a low of Rs 7511 in March 2020
These are some of the major falls that the Nifty 50 index has seen. The BSE is a very old exchange and it dates back to 1875. However, NSE was set up in 1992.
What are the possible reason for a stock market crash?
There can be a number of reasons for a stock market crash. Some of them are mentioned below.
- Saturation in the economy, Weak Growth Rate
- Weak demand
- Overhyped pricing of Equity
- Threat to investment
- Higher Bond Yield elsewhere
- Behavioral change in the working habits of residents
- Unfavourable Government Policies
- Flight of FII, DII and Mutual Funds
- Default Culture
- Natural Disaster and Wars etc
Is the indian market crash good or a bad thing?
A small amount of correction is good for the overall market. The correction gives sufficient time to investors to rebalance their portfolios. The flow of money is adjusted and this promotes efficient allocation, utilization of wealth to create new assets. The Indian market is like a jungle. Some trees die and other trees live on their dead remains.