A look at the corrective phases in Indian market in the past decade and what caused them.
Sensex has lost 676 points in last five trading sessions resulting in loss of Rs 1.25 lakh crore for investors. The stocks of BHEL, Hindalco Industries, ICICI Bank, Larsen & Toubro and Tata Steel are at 52-week lows now. But, this is not the first time the bears have come out on a prowl.
The Indian stock market has been through many corrective phases before and the stock exchange archives even report instances of Sensex closing on a down-circuit freeze by falling up to 10 per cent in a day! May 17, 2004, May 22, 2006 and October 17, 2007 will always be remembered as dark days in Indian stock market history, for the markets did the unimaginable by hitting the 10 per cent lower circuit.
We take a look at the corrective phases in Indian market since 2000, when they happened and what caused it. Lessons from history perhaps bring back hopes that the current phase shall too pass by.

2000: dot-com bubble

The frenzied buying in tech stocks saw equity markets across the globe peak out in the year 2000.
Any company with a business plan in internet technology received venture capital funding effortlessly and got a free-door entry to the capital markets with investors willing to bet on them at any price.
The climax however came sooner than expected. The tech-heavy US Index NASDAQ crashed in April 2000 as technology companies were caught in a cash crunch situation. The problems in the US echoed in India too.
Technology companies back home were beaten up badly on concerns that they will not be able to keep up with the growth expectations, as the US, their key export market, had run into troubles.
From a high of 6,150 in February-2000, Sensex dropped to 3,943 in May-2000. In the same period, the BSE IT index fell by 71 per cent. Other sectors such as- auto, capital goods, healthcare and metal were sparred with losses of 20-40 per cent.
DSQ Software, one of the heavily traded tech stocks then was among the ones to be worst hit (the stock has been suspended and it doesn't trade in the exchanges now).

2004: political Uncertainty

The correction that started in February 2000 ended in September 2001 with Sensex touching a low of 2,600.
Post that, Sensex started edging up steadily till it took a halt in April 2004 (at 5,926) when political uncertainty in the country brought troubles for the market.
With the BJP government's defeat in Central elections, the UPA led by Congress came to power in 2004.
But, with the decision of who will sit in the Prime Minister's chair itself hanging in air for many days, there were doubts about the coalition-led UPA government's ability in addressing economic woes of the country.
Foreign institutional investors pulled out money from India stocks and the markets went into a sharp correction.
On May 17, trading was halted twice in Sensex with the index dropping more than 10 per cent (Sensex fell 842 points intraday and closed 565 points lower for the day) and hitting down-circuit.
Stocks in engineering, infrastructure and capital goods space that are largely dependant on government spending faced investor wrath. Crompton Greaves, Engineers India, SAIL were among the worst performers on May 17 falling over 20 per cent.

2006: DTAA worries

As the new government settled in the centre Sensex began its uphill journey. On May 10, 2006, Sensex touched a new high of 12,612.
But after that celebrations didn't last. In the global markets, metal prices faced correction on slowdown in Chinese demand.
This set in a panic in equity markets across globe and FIIs started pulling out cash from Indian equities too.
Meanwhile, the pressure on the ruling government from the Left Parties to rethink levying long-term capital gains tax on equity investments and scratching the double taxation avoidance agreement (DTAA) with Mauritius also started to weigh on investor sentiments.
On May 22, the Sensex fell 1,111 points intraday and hit down circuit. The consumer durables and metal stocks were the worst hit.
The BSE Metal index was down 7 per cent for the day; Hindustan Zinc dropped 20 per cent.
Large-caps such as Reliance Industries (dropped 5 per cent to Rs 466), ICICI Bank (fell less than one per cent) and Bajaj Auto (dropped 2.5 per cent) contained losses.

2007and 2008: Regulatory action

The markets which were moving at a steady pace hit a block in 2007 when SEBI proposed to curb participatory notes.
On October 17, 2007 Sensex hit a down-circuit by dropping over 1,700 points in minutes of opening of trade as FIIs pressed the ‘sell' button in panic. But this phase too passed and the markets rallied to cut 20K mark by end October, 2007.
And from here the index edged up to 21K in January 2008. But that was the end of the good times, as the rest of year was only a nightmare for investors. The row of bankruptcy filing by US' big mortgage banks on sub-prime losses shocked the whole world.
Global equity indices faced sharp corrections. The Indian benchmark Sensex plunged, drifting lower and lower every month; the index hit a low of 8160 in March 2009.
From the lows of March-2009, Sensex recovered to touch 21K again in November 2010.
But it was not long before the index lost its gains to negative news developments. Doubts over the recovery in the US, continuing pain in the debt-ridden Europe, falling rupee, put together have managed to turn the tide. Last Friday, Sensex closed at 15695.