The benchmark Nikkei average failed to extend its winning streak to a fifth session on the Tokyo Stock Exchange Wednesday, as profit-taking prevailed following the previous day’s upsurge.
The 225-issue average lost 23.78 points, or 0.10 percent, to end at 22,913.82. On Tuesday, the key market gauge shot up 389.25 points.
Meanwhile, the Topix, which includes of all first-section issues on the TSE, gained 4.31 points, or 0.24 percent, to close at 1,817.60, the highest closing since Nov. 14, 1991. The index rose 20.63 points the previous day.
Stocks opened sharply lower, battered by selling to lock in profits after the Nikkei average jumped to finish at the highest level in nearly 26 years on Tuesday, marking the best closing since the collapse in the early 1990s of Japan’s bubble economy.
Investors’ risk appetite decreased also because of a halt in the yen’s weakening against the dollar, brokers said.
In the afternoon, however, the Nikkei recovered much of the lost ground and the Topix returned to positive territory.
The market’s downside was supported by bargain hunting by foreign investors who took heat from a recent series of brisk earnings reports by Japanese firms, brokers said.
The market “entered a lull,” an official at a bank-affiliated securities firm said. It was not surprising to see moves to cool down the market, the official added.
Although stocks underwent an speed adjustment, nonresidents’ buying sentiment remained intact “on the back of the stable political conditions in Japan,” said Hiroaki Hiwada, strategist at Toyo Securities Co.
Expecting foreign players to keep staying on the buy side, Hiwada said, “I think the Nikkei can retake 23,000 by the end of this month.”
Rising issues outnumbered falling ones 1,041 to 890 in the TSE’s first section, while 102 issues were unchanged.
Volume dropped slightly to 1.87 billion shares from Tuesday’s 1.90 billion shares.
Kubota lost 6.64 percent due to the machinery maker’s lower-than-expected operating profit forecast for the current year ending in December, brokers said.
Mega-bank groups Mitsubishi UFJ, Sumitomo Mitsui and Mizuho as well as insurers Dai-ichi Life and Tokio Marine were downbeat, following overnight falls in their U.S. peers.
Also on the minus side were department store operator Isetan Mitsukoshi Holdings and oil company Idemitsu.
By contrast, Toyota attracted purchases after the leading automaker revised up its operating profit estimate for the year through next March on Tuesday.
Other major winners included printer producer Brother Industries and electronic parts maker Rohm.
In index futures trading on the Osaka Exchange, the key December contract on the Nikkei average fell 50 points to 22,940.