The expected decision of the RBI to leave interest rates untouched was just not enough to prevent the avalanche of selling that engulfed the bluest of blue chips as they hurtled to their 52-week low on the NSE today.
That more than 25 per cent of the Nifty constituents touched their 52-week lows after the RBI Governor’s announcement indicates the huge selling pressure the market witnessed on a day of extreme volatility.
The optimism that the market exuded in the morning after the RBI decided to shore up the rupee against the dollar — a move that propelled financial sector stocks — and later when the central bank decided to stay the course, gave way to despair later in the day as the Sensex and the Nifty went into a free fall, singeing all sectors.
Investors seemed to be in a hurry to get out of the markets. This was surprising because though the RBI Governor did not reduce the rates, he did not raise them either and indicated that a rate cut was some distance away. His stand did not dramatically alter the market dynamics to warrant the kind of response the investors displayed, particularly in view of the encouraging employment data in the US which led to improved sentiment in the US on Thursday and in the Asian markets this morning.
The list of stocks that sank to their 52-week lows (given in brackets) but recovered mildly at close was long including Siemens (Rs 642.25), RCom (Rs 66), Reliance Power (Rs 73.50), Sesa Goa (Rs 160.20), BHEL (Rs 236.20), Tata Steel (Rs 362.45), SAIL (Rs 73.50), ICICI Bank (Rs 664.85), HDFC Bank (Rs 410), Reliance Infra (Rs 342.35), Sterlite (Rs 88.10), AXIS Bank (Rs 895), PNB (Rs 819), Ranbaxy (Rs 373.50) and L&T (Rs 1,060).
Those that barely escaped hitting 52-week lows include ONGC that touched a low of Rs 246.15, just Rs 5 more than its lowest in a year of Rs 241.75, PowerGrid Rs 96.60 (Rs 93.15), GAIL Rs 368 (Rs 365.20), before recovering strongly to close at Rs 386.65 and Maruti that crashed to Rs 908.70 (Rs 907.05) before recovering spectacularly to Rs 935.
But what probably saved the market the blushes was that market heavyweights Reliance and SBI managed to ward off their 52-week lows. While Reliance’s low of Rs 716.05 was perilously close to its 52-week low of Rs 712, SBI slumped to Rs 1,665.15 (short of its 52-week low of Rs 1,627.25).