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Five primary causes of the stock market crash

A stock market crash is a rapid decline in the prices or prices of many shares on the stock market; the occurrence of a stock market crash is regarded as a very significant event, such as the Indian stock market crash of 2008, for example. It was a massive STOCK MARKET CRASH when the stock markets of other countries of the world experienced a precipitous decline.

In such a circumstance, it is crucial to comprehend the causes of the stock market crash as well as its advantages and disadvantages.

In today’s post, I hope to learn from you about the various causes of the Stock Market Crash.


Although there is no definitive definition of Stock Market Crash, a crash is considered to have occurred if the percentage of stocks falls by double digits within a few consecutive days.

For instance, a stock market crash occurs when the index SENSEX of the Bombay Stock Exchange or the index NIFTY of the National Stock Exchange falls by 10 percent or more within a few days, typically within 1 to 10 days. Historically, And the market has experienced a recession.

It is important to note that there is no single reason for the fall of the stock market; rather, there are a number of possible causes. However, there are some major causes, so let’s discuss them now. CRASH. understand –

First cause – wagering or speculation (SPECULATION)

Some people attempt to make money on the stock market through betting. Betting is synonymous with gambling; if you lose, you lose everything you bet on, and if you win, you anticipate a substantial profit. it occurs.

Whenever the market gives continuous profits and there is a continuous boom in it, large numbers of people begin to bet on the market. As a result of these bets, the market begins to grow faster, and then, after a period of time, the market begins to decline. occurrences result in a significant decline in the stock market.

The second cause is political unrest (POLITICAL RISKS)

You must have noticed that elections have a significant impact on the stock market. When the government is stable and people have more faith in it, the market begins to grow, but when political reshuffles are expected, the market rapidly declines.

Government tax policy, economic growth, and international relations are just a few of the factors that influence the market.

Thirdly, the economic downturn

It is difficult to determine whether a stock market crash causes an economic recession or whether an economic recession causes a stock market crash, but economic recession must occur if a stock market crash continues for an extended period of time. And if the economic downturn lasts for an extended period of time, the stock market may crash.

The fourth cause – war (WAR)

In the event of a war between two countries or a global war, investors withdraw their funds from the stock market, causing it to crash.

For instance, in 2017, after the Indian Army conducted a surgical strike against Pakistan, which was a small war, the stock markets of both countries experienced a significant decline due to widespread fear.

Fifth reason – global economic downturn

Due to the effects of the global economic recession, the stock market crashes; 2008 is the most prominent example. As soon as the US stock exchange crashed, it affected the stock markets of other countries, including India. occurred, and the Indian stock market crashed as well.

so friends ,

In today’s post, I discussed the five major causes of the stock market crash. How did you like the post? Please comment below with any suggestions or questions.

Thank you for reading the post in its entirety.

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