The Indian stock market has seen its share of highs and lows—spectacular bull runs, jaw-dropping crashes, groundbreaking reforms, and headline-making scams. Each of these events has shaped how the market functions today and influenced how investors behave. To truly understand the present, it helps to look back at the defining moments that brought us here.

The Harshad Mehta Scam (1992): Shaking the System

One of the biggest shocks to India’s financial system came in the early ’90s, when stockbroker Harshad Mehta was found to be manipulating the market using banking loopholes. His actions led to a massive rally, followed by a dramatic crash when the fraud was exposed.

The impact was severe – investors lost crores, trust was shattered, and financial systems were exposed for their vulnerabilities. But it also led to something positive: the creation of SEBI as a strong regulator, and the eventual launch of the National Stock Exchange (NSE) to bring transparency to trading.

Introduction of Electronic Trading (1994–1996): A New Era

Before the mid-’90s, stock trading was done via physical exchange floors, with brokers shouting bids and filling out paper orders. But in 1994, NSE introduced screen-based trading, and by 1996, shares began to be held in Demat (dematerialized) form—no more paper certificates.

This was a turning point. Suddenly, investing became faster, more transparent, and less prone to manipulation. It also laid the foundation for today’s app-based trading.

The Dot-Com Bubble (2000): Lessons in Hype

The early 2000s brought a wave of optimism as internet-based companies boomed worldwide. India wasn’t immune – investors poured money into tech stocks, believing they’d all be the next Infosys or Wipro. When the dot-com bubble burst, however, the excitement turned to panic. Stock prices collapsed, and many investors exited the market disillusioned.

This period taught retail investors an important lesson: not all hype leads to profits, and due diligence matters more than buzzwords.

The Global Financial Crisis (2008): A Wake-Up Call

When the Lehman Brothers collapse triggered a global meltdown, Indian markets weren’t spared. The Sensex fell from over 20,000 to below 9,000, wiping out years of gains in a matter of months. Foreign investors pulled money out, and panic gripped even seasoned traders.

But India’s strong banking system and prudent regulations helped the market bounce back faster than many expected. For long-term investors, it became a lesson in staying invested during tough times.

COVID-19 Crash & Recovery (2020): The Unbelievable Comeback

March 2020 saw the markets crash by nearly 40% in just a few weeks, as the world shut down due to the pandemic. Uncertainty was at an all-time high, and panic selling led to sharp declines.

But what followed was unexpected—a massive bull run fuelled by retail investor participation, digital trading platforms, and global liquidity. New Demat accounts surged, and for the first time, millions of Indians entered the market, investing in everything from blue chips to IPOs.

The Rise of the Retail Investor

One of the most powerful long-term trends has been the rise of individual investors. With platforms like Zerodha, Groww, and others offering low-cost, easy-to-use investing solutions, the market has opened up like never before. What used to be considered risky or complicated is now seen as an essential part of wealth creation.

Events like the 2020 crash and recovery proved that even in turbulent times, staying calm and investing wisely can pay off. The younger generation especially has embraced investing, bringing a shift in mindset across the country.

Conclusion

The Indian stock market’s journey is a rich tapestry of booms, busts, reforms, and resilience. From the chaos of the Harshad Mehta scam to the democratization of investing through apps, each milestone has taught investors something valuable. These events serve not just as history lessons but as guides for future decisions.

In the next blog, we’ll shift gears a bit and dive into how research plays a critical role in successful investing—because understanding the market’s past is powerful, but knowing how to navigate it today is even more important.