9 Reasons for a Stock Market Crash
Stock market crashes have far-reaching consequences for both investors and society as a whole. As stock prices plunge, investors’ portfolios lose value, and firms with publicly-traded shares find it more difficult to raise funds. India and the global markets have witnessed and experienced numerous stock market crashes in the past, where the severity of each crash has been different. For instance, the 2020 Coronavirus stock market crisis only lasted a few months. On the other hand, the 1929 US stock market crash, known as the Great Depression, lasted ten years and was the biggest economic downturn in American history. Equities had lost over 90% of their value by the time it ended. The Financial Crisis of 2007-08 was another jolt to global economies. It was a result of the collapse of the US housing market and contributed to the Great Recession. The S&P 500 index dropped 51.9% in value, and the Sensex also fell by around 52%. In India, the Harshad Mehta scam in 1992 caused a crash in the stock market, and the BSE dropped 12.77%. Further, on May 17, 2004, when the UPA held a one-seat majority in the House of Commons, the BSE plunged 15.52%, the largest decrease in its history (in percentage terms).