The equity markets may well be going through one of the most volatile phases ever, but the magnitude of stock specific fall has never been this intense in any of the previous bear cycles.
In March, when the Sensex had its worst monthly fall in over 11 years — it fell little over 23% — there were at least five trading sessions when more than 1,000 stocks hit their 52-week lows in a single session.
Further, as per BSE data, more than 1,300 companies —nearly 59% of the total number of entities traded - saw their shares hit their 52-week low on March 13, which was the most volatile session ever for the benchmark that traded in a range of 5,400 points on that day. Incidentally, it was also the day when the Nifty hit its lower circuit breaker of 10% —the first time ever in 12 years. Similarly, on March 24, when the Sensex touched its own 52-week low of 25,638.90, as many as 1,133 stocks touched their respective such lows.
Underlying weakness
Market participants believed that the trend only showed that there was a huge underlying weakness in the market even as the benchmarks have gained significantly in some of the recent trading sessions — the Sensex has gained nearly 17% from its lows touched last month.
“In March, investor confidence was at its lowest in many years due to coronavirus pandemic and its potential global economic impact, massive surge in VIX and an all-time record high selling by foreign Investors,” said a head of a domestic brokerage.
Record run matters little
“In fact, even during the record run in January, the mood was not so upbeat as only few stocks outside the benchmarks touched new highs. That says a lot about the current trend,” he added.
This is corroborated by the fact that only 126 stocks touched their 52-week high on January 20 when the Sensex touched its all-time intra-day high of 42273.87.
Even on some of the trading sessions prior to January 20, the number of stocks hitting their respective 52-week high ranged only between 100 and 140.