Famous Stock Market Crashes: Lessons Learned from History 

Introduction

Stock market crashes have had a profound impact on the global economy

Let us explore some of the most famous crashes and the valuable lessons they teach us

Harshad Mehta Scam (1992)

Harshad Mehta manipulated stock prices, leading to a market crash. 

 Importance of regulatory oversight, transparency, and the need for robust risk management systems. 

Lessons: 

Ketan Parekh Scam (2001)

Ketan Parekh engaged in fraudulent trading practices, causing market instability

The risks of market manipulation, the role of auditors, and the need for strict enforcement of securities regulations

Lessons: 

Global Financial Crisis (2008)

The global crisis had a significant impact on Indian stock markets

Importance of risk diversification, understanding global interconnections, and the need for effective crisis management

Lessons: 

Flash Crash (2014)

A sudden and rapid decline in Nifty 50 index occurred due to erroneous trades

The importance of circuit breakers, market surveillance, and robust risk management systems

Lessons: 

Demonetization (2016)

The Indian government's decision to demonetize high-value currency notes caused market volatility

The impact of government policies on markets, the need for adaptive investment strategies, and managing short-term market disruptions

Lessons: 

IL&FS Crisis (2018)

Infrastructure Leasing & Financial Services faced a severe liquidity crisis

The significance of credit risk assessment, due diligence, and the role of credit rating agencies

Lessons: 

COVID-19 Pandemic (2020)

The pandemic-induced market crash resulted in extreme volatility and economic uncertainty

The importance of risk management, resilient investment strategies, and the value of long-term investing

Lessons: 

NSE Technical Glitch (2021)

Technical issues at the National Stock Exchange disrupted trading

The significance of robust market infrastructure, contingency planning, and effective communication during disruptions

Lessons: 

Conclusion

Famous stock market crashes in India provide important lessons for investors and regulators 

Learning from history can help navigate volatile markets, strengthen regulations, and build resilient investment portfolios