The BSE Sensex hit a peak of 42,273 points in February 2020 before crashing 38% to 25,638 points. The crash was caused by several factors, including a slowing Indian economy, pressure from sectors like automobiles and banks/NBFCs facing liquidity crises, the classification of coronavirus as a world epidemic which spooked global markets, the YES Bank crisis deepening existing financial troubles, the effects of coronavirus on the Indian economy including international flight bans, and FIIs pulling out as work from home policies increased the prospects of a lockdown.

1. Why Did The BSE Sensex Crash in 2020?
Everyone must be awareabout what a stock market crash is.For those who areunsure about this term, a
stock market crash is a situation when a stock exchange’s index drops by a huge percentage or margin in justa
few sessions.Usually,such a drop is often unanticipated,though there are always somepundits and experts
who keep predictingthe next stock market crash.
Stock markets crash due to certain reasons.These could be economic bubbles or the collapseof largefinancial
corporations,wars and other natural disasters such as earthquakes.When the stock markets crash,people
often begin panic sellingtheir stocks.Sincea stock market index is essentially a supply-demand equation,this
panic sellingcreates further fall in thestock market index. Due to the immense wealth destruction that
happens duringa crash,stock markets across theworld deploy multiplemeans to stop a crash.
As you all mustbe awarethat the BSE Sensex hit a peak of 42,273 points in February 2020.And then crashed
by a massive38% to hit 25,638 points.If you arewondering why the Senex crashed,the followingsequence of
events will help you understand the reasons:
 The Indian economy has been under severe pressuresincethe startof FY 2019-20.The union budget
presented in July 2019 didn’t imbibeconfidence in the investors,and as a resultmany FIIs (Foreign
Institutional Investors) began pullingoutof Indian stock markets.
 Sectors such as automobileand auto-ancillary which were facing unprecedented slowdown weighed
heavily on the BSE Senex.
 Similarly,the liquidity crisishad severely impacted the stocks of banks & NBFCs. These stocks were
also a dragon the BSE Sensex.
 However, when WHO (World Health Organisation) classified Coronavirusas a world epidemic,it
spooked stock markets across theworld. Leading markets such as NYSE, NASDAQ, Tokyo Stock
Exchange, etc. recorded heavy selling.
 This pressurehad a directbearingon the Indian indices as well.Butat this stage, the YES bank saga
unfolded thus the crisis in thealready strained financial sector further deepened.
 When things couldn’tget worse, the effect of Coronavirus started showingon Indian economy. The
Government of India banned international flights fromCovid-19 affected countries thereby leadingto
heavy losses to the travel & tourismindustry.
 But as companies started declaringwork-from-home policies and prospects of a lockdown became
more probable,FIIs started pullingoutof the Indian markets.
 This caused the BSE Sensex to crash significantly.
But, every upsidealso has a downside.And so does this BSE Sensex crash.Pleaseread this article‘How India
can benefit out of the coronavirusstory’and you’ll understand the upsideto it.