The Dow Jones Industrial Average Index, the benchmark of the US equity market, registered its biggest ever crash of 22.6 per cent on October 19, 1987 - the day remembered as the original 'Black Monday' in the stock market history.
The Sensex's over 438 points or 2.44 per cent fall is barely about one-tenth of that happened 20 years ago in the US, but it extended the ongoing meltdown on Indian bourses for the third consecutive day that has eroded close to 1,500 points or about eight per cent from the 30-share barometer index.
This is in contrast to what happened 20 years ago on the Black Monday. While repercussions of the crash in the US were seen across the European, UK and a number of Asian markets, Indian bourses were insulated and the newly launched Sensex actually moved higher with gains registered by then blue chips such as Hindustan Motors, Tisco, Reliance and ITC.
The Sensex was launched only a year ago in 1986. The London Stock Market plunged by over 26 per cent in the next few days, while Hong Kong market shed over 46 per cent before the end of the month.
The crash of October 1987 followed a five-year bull run in the global equity market. Incidentally, earlier this month on October 10, the global stock markets celebrated the five years of the current bull run that began in 2002.
In these five years, the Indian stocks have also been broadly on an uptrend on a long-term basis, although there have been some major hiccups in between.
The Indian bourses recorded their biggest ever plunge of 11.4 per cent on May 17, 2004, while the biggest ever fall in absolute terms was registered last year on May 18. On Thursday, the Sensex recorded its second biggest fall of 717 points.
However, the recent falls pale in comparison to the May 2004 plunge when compared in percentage terms.
Even in the US, the market has seen several major falls in the past, but all were relatively small in percentage terms. The great crash of 1929 was a fall of just 12 per cent, while in the aftermath of 9/11 terror attacks the DJIA fell by just 7.3 per cent.
Even the recent subprime crisis could prompt a maximum one-day fall of 8.3 per cent in the US. The 'Black Monday' in 1987 had eroded close to $500 billion from the investors' wealth.
In comparison, the three-day plunge on the Indian bourses, which began on October 17, has eroded close to $100 billion from the investors' wealth here.
