From Scams to Shutdowns: The 5 Worst Stock Market Crashes That Shook India And Why April 7 Isn’t One of Them

Indian stock markets took a heavy hit on April 7 as both the Sensex and Nifty sank by nearly 4 percent, rattled by fears of a global trade war. The fall came after China announced retaliatory tariffs in response to former US President Donald Trump’s new trade measures — a move that has sparked fresh concerns over global recession risks.

But while the sharp fall triggered panic among investors, experts are pointing out that this week’s drop doesn’t even come close to some of the darkest days the Indian markets have seen in the past.

Here’s a look at five of the biggest crashes in the history of Indian stock markets — events that left long-lasting scars and tested the resilience of investors in a far deeper way than what we’re seeing today.

1. The Harshad Mehta Scam – 1992: A Rally Built on Lies

Back in the early 1990s, stockbroker Harshad Mehta became a household name — first for making millions in the market, and then for orchestrating one of the biggest financial scams India had ever seen.

Mehta was accused of exploiting loopholes in the banking system and stock exchange to funnel money into stocks using fake bank receipts (BRs). The result? Artificially inflated stock prices that created a false sense of prosperity. The Sensex doubled in just a few months — from 2,000 in January 1992 to 4,000 by March.

But when the scam came to light, everything came crashing down. On April 28, 1992, the Sensex fell nearly 13% — its biggest single-day fall at the time. The market eventually lost over 56% in value over the following year. Recovery took nearly two years.

2. The 2008 Financial Meltdown: When Lehman Collapsed, The World Shook

Nothing sent shockwaves through global markets quite like the collapse of Lehman Brothers in September 2008. The American investment bank’s failure triggered a worldwide financial crisis, shaking investor confidence to the core.

Foreign investors rushed to pull funds out of emerging markets like India. On January 21, 2008, the Sensex dropped 7.4% in one trading session as panic gripped Dalal Street. Over the next several months, the Sensex, Nifty, and broader indices like the Nifty 500 lost more than 60% from their yearly peaks.

It wasn’t until late 2010 that Indian markets began posting strong returns again.

3. COVID-19 Crash – 2020: A Health Crisis Turns into a Market Collapse

In early 2020, the arrival of the COVID-19 pandemic forced India — like much of the world — into a complete lockdown. Economic activity froze almost overnight. Businesses shuttered, consumer demand vanished, and fear surged.

The Sensex fell by more than 39% within just two months, hitting a low of 25,639 in March. On March 23, it dropped over 13% in one day — one of its worst declines in history.

However, the market staged a remarkable comeback later that year, boosted by retail investor participation, low interest rates, and global liquidity.

4. Election Day Drama – June 4, 2024: Markets Misread the Mood

In the lead-up to the 2024 Lok Sabha elections, confidence was high. Exit polls suggested the BJP-led NDA would secure a dominant win. The markets rallied ahead of the result, hitting record highs on June 3.

But when the actual results rolled in on June 4, it became clear the BJP would fall short of a majority on its own, although the NDA still secured over 290 seats.

The surprise led to a sharp selloff. The Nifty dropped by 5.93%, while the Sensex declined 5.74%. At one point during the trading session, both indices were down by as much as 8.5%.

It marked the worst intraday fall since the COVID crash in 2020.

5. Trump’s Trade Tariff Jolt – April 2025: Global Tensions Spill Into Dalal Street

The latest blow came this week, as markets reeled from yet another major development overseas. On April 7, both the Sensex and Nifty slid around 4% amid renewed fears of a global trade war. President Donald Trump’s announcement of steep tariffs — and immediate countermeasures by China and the European Union — set off alarm bells across asset classes.

Gold, oil, and global equities all turned volatile. In India, the Sensex fell to 72,485, while the Nifty lost nearly 1,000 points to trade close to 22,000.

Still, market watchers say this isn’t the worst drop investors have lived through. Not even close.