U.S. Earnings Watch

After the close Alcoa (AA: chart) kicked off the earnings season with the release of third quarter earnings from continuing operations of 64 cents per share, 3% increase from a year ago on the revenue of $7.4 billion. The quarterly result includes sale of Chinese company Chalco and charges related to the upcoming sale of packaging and auto casting unit.

Net income in the third quarter was 63 cents per share or $555 million compared to $537 million or 61 cents a year ago and $715 million or 81 cents per share in the second quarter. Revenue in the quarter declined to $7.4 billion from $7.6 billion a year ago and $8.1 billion in the second quarter of 2007.

The company board authorized repurchase of up to 25% of the outstanding common stock or app 217 million shares.

Microchip technology (MCHP: chart) fell 12% after reporting preliminary second quarter earnings of 38 cents per share and revenue decline of 2% from the first quarter between $258 and $259 million.

Mr. Gordon Parnell, Microchip’s Chief Financial Officer, said, “We expect days of inventory to increase based on these revenue levels. Days of inventory at September 30 are expected to be approximately 112 days, up 5 days from overall inventory levels as of the end of June.”
Mr. Steve Sanghi added, “Our book-to-bill ratio for the September quarter was 0.94, leading our business into a more seasonally challenging period in the December quarter. While we are not in a position to give specific guidance at this point, we expect that December net sales will be sequentially down. Based on the current level of uncertainty in the consumer segment of the business, we expect that the range of our guidance will be wider than our typical level.”

12:00AM New York, 9:30PM Mumbai – Sensex surged 4.5% to a new record as two factions in ruling coalition decide to talk.

Sensex in Mumbai recovered from three-day of losses as tension between the Congress-led government and its communist allies over the nuclear deal temporarily eased. Every stocks in the 30-BSE Sensex index rose. Reliance Industries led the gainer and stocks of real estate, capital goods, and metal stocks edged higher.

The Congress-led United Progressive Alliance government and its communist allies agreed Tuesday to meet in the next two weeks to resolve their differences over a nuclear agreement with the United States. Market watchers interpreted this as a positive sign and surmised that ruling coalition is likely to survive.

The 30-share BSE Sensex jumped 4.5% or 788.6 points to 18,280. The CNX Nifty ended up 4.8% or 242 to 5.327. Of the BSE shares 1,754 advanced, 930 declined, while 380 were unchanged.

All shares in the 30-share BSE Sensex index gained. The BSE turnover was 7,793 crore rupees and on the NSE was 18,456 crore rupees.

International ratings agency Standard & Poor''s said on Tuesday it expects India''s economy to grow by 9% in 2007 and 8.8% in 2008. The report said the Indian economy was mainly driven by strong local demand and a moderation in growth in the current fiscal year was a soft landing. The agricultural sector is projected to grow 3.4% while industrial sector will surge by 9.2%, the report said. Factory output will increase by 11.3%. The report also said the rupee would further strengthen against major currencies. S&P said interest rates were peaking, and the rupee was likely to end the year at 40.50 against the U.S. dollar.

Of the Sensex shares, Reliance Energy climbed 11.2% to 1,533.7 rupees and led the gainers in the Sensex index. Reliance Capital surged 8.7% to 1,768 rupees. Maruti Suzuki gained 8% to 1,105.35 rupees, and NTPC closed up at 6.2% to 217.7 rupees.

Reliance Industries was up 7.6% to 2,600.5 rupees. Reliance Industrial Infrastructure hit 5% upper daily trading limit at 1,868.70.

Metal stocks recovered from Monday''s losses. Tata Steel grew 5.8% to 834.6 rupees. Hindalco Industries gained 1.5% 164 rupees, JSW Steel surged 5.7% to 850 rupees while State Bank rose 6% to 1,889.8 rupees.

Infosys closed up 2.4% to 2,048 rupees, ahead of its earnings this week. Analysts are projecting a sales rise of between 7% and 10% and profit gain of between 1% and 4.5%. The revenues are estimated between 4,050 crore and 4,150 crore rupees and with the earnings between 1,072 crore and 1,130 crore rupees.
Suzlon Energy jumped 1.6% to 1,673 rupees after its American subsidiary received an order for 400 mw wind mill turbine from Horizon Wind energy.

Larsen & Toubro surged 4.7% to 3,163 rupees after it received an order from Indian Oil Corporation for 693 crore rupees. Bharat Heavy Electricals closed up 2.1% to 2,236.75 rupees after the company received an order for 390 crore rupees power plant in Andhra Pradesh.


10:00AM New York, 10:00PM Tokyo – Real estate and exporters lift Japan 0.56%. Bank of Japan starts its three-day meeting.

In Tokyo trading Nikkei 225 rose 0.56% or 94.86 to 17,159.90.