What a whole lot this morning promised and what a disappointing tame close we had today for our markets. It just fizzled out in the second half. This morning we walked in with a big rally, the biggest rally in five years from the US market. Asia was responding well, though was not going ballistic in the morning, 2% kind of rises across the Asian screen.

We started gap-up quite a bit, and straightaway went past 5,000 on the Nifty, and 16,600 on the Sensex and then it just did not stay above those levels for the rest of the day. 5,000 did not hold, we came back quite substantially.

But the closing was disappointing. For most of the day it looked like you would get away with probably a 80-100 point gain on the Nifty, which would have been acceptable, and maybe a 200-300 point gains on the Sensex, some profit taking would have been acceptable too. But the Sensex actually dipped into the red by the end of it all. So, no follow-up buying at the end of it, maybe traders booked some profits as well. The Sensex from the highs of the day lost nearly 600 points to slip into the red, and the Nifty from the highs of the day lost about 150 points.

But the most disappointing aspect of today’s trade was the midcaps. Yesterday we saw a 4% rally in the midcap index. This morning the midcap index started more than 3% up and closed 2% down. There was a 5% intraday swing in the midcap index and the breadth turned horribly negative.

We started 10 for 1 on advance-declines, and by the time we ended there were only 500 advances to 700 declining stocks. So, it was a very disappointing breadth by the end of it all, quite a big reversal. We don’t know if it is conclusive showing inability to climb higher levels and stay above 5,000 because it is just one day’s trade, but the signs will not please the bulls.

The big damage of course came from the metals universe today. Tisco’s numbers did not go well with the Street. Metals generally had corrected a bit. So, we saw Tisco, Hindalco, SAIL all selling off between 5-6%. Technology had a rough day as well led by Satyam and Infosys and other stocks like Lever, RPL did not help the index at all.

Banking too did not look very strong. There was talk of a Rs 10,000 crore fund for the debt waiver for banks. But immediately after that news, SBI and PNB came off.

In the second half of the day, the market came off principally after the IIP data that came in, which looked quite weak and unexpectedly so. So, that might have soured sentiment towards the second half of the session because we must have been along with China one of the weakest markets in the world today.

There are some pockets of good or positive activity. Cairn did well, Unitech had a good comeback, and there were some stocks like ICICI Bank and Reliance Energy, Cipla included that did not do too badly. In the midcap space, fertilisers and some banking stocks did okay. But by the end of it all, many of the liquid stocks including sugar had come off, and REC managed to hold on to a respectable closing on day one at around Rs 120.