Has the market panicked?

The S&P/ASX 200 index (Index: ^AXJO) (ASX: XJO) has closed down 0.6%, ending at 4,303.5, led by the falls in the banks and other defensive stocks. Volumes were low as investors sat on the sidelines, before the European Central Bank’s meeting on Thursday. According to media reports, markets are predicting that the bank will cut official interest rates by 0.25% to 0.5%.

The big news of the day was that the Reserve Bank of Australia kept official interest rates unchanged at 3.5%.

Despite low trading volumes and the market rising, these three stocks were pummelled.

The world’s biggest provider of mineral drilling services, Boart Longyear Limited (ASX: BLY) shares were smashed down 11% to $1.27. In the last five days, the shares have lost 47% of their value, following comments last week by the CEO that the company was unable to forecast earnings in the next financial year. Slowing growth in China, concerns around the European debt crisis and potential for miners to cancel much of their exploration drilling have weighed on the stock. As the CEO said in an interview with Bloomberg, “Miners are deciding to pause for a minute and go back and just try and get as much ore out of the ground at the best cash cost”.

NRW Holdings Limited (ASX: NWH) saw its share price fall 19 cents, or 8% to close at $2.23. Like most other mining services companies, NRW has seen its share price smashed over the last week, down 23%, in the last five days. Fears that mining contracts will soon dry up, has seen most, if not all mining services companies punished.

Iron ore miner, Gindalbie Metals Ltd’s (ASX: GBG) shares fell 6% to close at 31 cents. Analysts have cut their recommendations on most of the iron ore miners, Gindalbie included, as the iron ore price fell to around US$90 a tonne, compared to US$135 a tonne, just over a month ago. Investors appear to be concerned that the company’s cost of production is relatively high, compared to the commodity price.

The Foolish bottom line

Markets tend to over-react on many occasions, both up and down, and potentially may have done the same with the above three stocks. If iron ore stocks and mining companies’ shares continue to fall, it may be a fertile sector to pick up some bargains.

If you’re in the market for some high yielding ASX shares, look no further than our “Secure Your Future with 3 Rock-Solid Dividend Stocks” report. In this free report, we’ve put together our best ideas for investors who are looking for solid companies with high dividends and good growth potential. Click here now to find out the names of our three favourite income ideas. But hurry – the report is free for only a limited time.

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Motley Fool writer/analyst Mike King doesn’t own shares in any companies mentioned. The Motley Fool’s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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