Sensex Crashes Nearly 4,000 Points amid Global Sell-Off, Rs 16 Lakh Crore Wiped Out

Indian stock market benchmark indices, Sensex and Nifty 50, witnessed a crash on Monday, mirroring a global market sell-off. The fall was driven by rising fears by an escalating global trade war. The turmoil was triggered by US President Donald Trump’s imposition of reciprocal tariffs, raising concerns among investors worldwide.

Indian stock markets opened sharply lower on April 7, with the Sensex crashing nearly 4,000 points in early trade. The Nifty 50 dropped below the 21,750 mark, inching closer to its one-year low. Broader markets were hit even harder, as the Midcap and Smallcap indices plunged up 10%, reflecting widespread panic among investors.

Indian stock markets faced a historic rout on Monday, with the Sensex opening 3,914.75 points or 5.19%, lower at 71,449.94. Nifty 50 also plunged sharply, falling 1,146.05 points, or 5.00%, to open at 21,758.40- making one of its biggest single-day falls ever. The massive sell-off wiped out nearly Rs.16 lakh crore in investor wealth within minutes, as the total market capitalization of BSE-listed companies dropped from over Rs. 403 lakh crore in previous to Rs. 387 lakh crore.

India VIX spiked 56.50% to 21.53 on April 7, signaling heightened investor anxiety and expectations of sharp market swings amid escalating global trade war concerns. The steep sell-off in global stock markets has drawn comparisons to ‘Black Monday’ of October 19, 1987 which was considered as the first modern global financial crisis, raising the fears of a repeat of such turmoil.

The top five biggest single day stock market crashes in India’s financial history:

1. 1992 Harshad Mehta Scam: The Indian stock market had witnessed its first major shock in 1992 following the exposure of the Harshad Mehta scam, estimated over Rs. 4,000 crore. On April 28, 1992, the Sensex recorded its biggest single-day fall at the time, crashing 570 points, or 12.7%. The scandal shook investor confidence and led to far-reaching reforms in India’s financial system, including advanced regulatory powers for the Securities and Exchange Board of India (SEBI).
2. 2001 Ketan Parekh Scam: The Indian stock market faced another major jolt in 2001 following a stock manipulation scandal involving broker Ketan Parekh. On March 2, 2001, the Sensex fell 176 points, or 13%, as news of the scam broke, triggering panic among investors. The sell-off was intensified by the recent dot-com bust, the devastating Gujarat earthquake, and weak global market cues, leading to sharp decline in investor sentiment.
3. 2004 Election Shock: Indian stock markets faced a major upheaval on May 17, 2004, after the UPA over the NDA in the General Elections. The surprise outcome raised concerns over the future of ongoing economic reforms, triggering a wave of panic selling. The Sensex plunged 11.1% in one of its worst single-day crashes, forcing trading to be halted twice during the session. Markets eventually stabilized after the UPA assured its commitment to continuing key economic reforms.
4. 2008 Global Financial Crisis: The Indian stock market was hit hard during the2008 global financial meltdown, following the collapse of Lehman Brothers in the US. On January 21, 2008, the Sensex crashed 1,408 points, or 7.45, amid growing fears of a global recession and heavy sell-offs by Foreign Intuitional Investors (FIIs). The downturn deepened over the following months, with the Sensex losing nearly 60% from its peak, marking one of the most severe bear phrases in India’s market history.
5. 2020 COVID-19 Pandemic: On March 23, 2020, the Indian stock market suffered its most severe single-day crash, as the Sensex plummeted 3,935 points, or 13.2%, following the announcement of a nationwide lockdown to contain the COVID-19 outbreak. Fears of an economic halt and a looming global selling. However, markets rebounded strongly in the months that followed, supported by swift fiscal and monetary measures from the government and the Reserve Bank of India.