Stock Market Crash Story Of 1865 And 1982.

History of Stock Market Crashes in India – Known and Unknown

There is volatility in the stock market. As a result, there have been instances where market crashes have quickly resulted in losses for investors. A quick double-digit decline in indexes is the standard definition of a crash. Even though markets have usually recovered, crashes can occasionally have years-long effects.

We're going to rewind time and examine a number of popular and smaller Indian stock market collapses today.

1865

The first-ever market collapse in India happened long before the Bombay Stock Exchange was established. At the intersection of Meadows Street and Rampart Row in 1865, a group of Parsi and Gujarati dealers would exchange stocks of Indian enterprises with one another.

At the time, cotton was a significant export good for Indian businesses, and the American Civil War, which broke out in 1861, increased demand for the crop. The price of cotton increased abruptly and sharply as a result, which also helped the stocks of businesses that produced and exported cotton. Additionally, many who profited from selling cotton put their money into equities. The Civil War ended in April 1865, which led to a drop in cotton demand and a stock market Crash.

A large number of stockbrokers relocated to Dalal Street in 1874, and the Bombay Stock market, Asia's first established stock market, was founded in 1875.

1982

While the events of 1982 may not have directly led to a stock market collapse, they are also worth remembering.
A lot of people don't know how Dhirubhai Ambani turned things around and stopped a bear cartel from taking over.
Reliance Industries' shares were trading for about Rs. 131 in 1982. The price of the share fell quickly to Rs. 121. It is significant to remember that during this time, the settlement period for stock markets was 14 days. Therefore, it would be considered an intraday trade today if you were to buy and sell shares throughout the 14-day timeframe. Thus, a lot of people would short-sell if they thought the price would drop and purchase it during the settlement period by making a booking a profit.

A bear cabal that shorted almost 11 lakh Reliance Industries shares was the cause of the decline in the share price. Mr. Dhirubhai Ambani saw that tiny investors may lose a lot of money and that people might stop believing in Reliance if this kept up. He therefore called together brokers who were Reliance Friends and instructed them to begin purchasing Reliance stock.
This resulted in a lot of Reliance share buying and selling over the 14-day settlement period. Friends of Ambani demanded the delivery of the shares sold by the bear cartel at the conclusion of the settlement period. Ambani prevented the stock markets from opening until the trades were settled, and the cartel lacked the shares. As a result, the stock markets were closed for three days in a row. 

Bear cartels were also at their height during this time. They would select a business, short sell its stock to drive down the price, then repurchase it at a reduced price to book gains.