The Nikkei 225 average closed slightly lower Tuesday, hurt by profit-taking after the recent surge, but its downside was limited thanks to buying on dips.
The key market gauge lost 11.72 points to close at 18,815.16 after adding 28.94 points Monday.
The Topix rose 1.86 points to end at 1,526.83 a day after rising 1.12 points.
Stocks attracted purchases at the outset after the Dow Jones industrial average rewrote its record closing high and the yen eased against the dollar.
A wide range of issues drew buying interest, including export-oriented automakers and electronics giants as well as domestic demand-oriented names, such as drugmakers, brokers said.
After opening above 18,900, the Nikkei cut gains and slipped into negative territory on increased selling to cash in gains.
However, stock prices showed some resilience, helped by buying on dips on persistent hopes for further stock rises on the back of Japan’s economic recovery trend, brokers said.
“Nothing was strange about stock rises coming to a temporary halt,” said Hiroichi Nishi, equity general manager at SMBC Nikko Securities Inc.
“Selling pressure will remain strong until the March 13 special quotation fixing to settle the March index futures and options contracts,” he said.
The TSE has risen without a major correction since mid-February, but the key indexes did not fall sharply as hopes lingered for share purchases by public pension funds and purchases of exchange-traded funds by the Bank of Japan, brokers said.
There is no major risk for the time being except a possible correction of the U.S. market, an official at a midsize brokerage said.
“More and more analysts started to believe that the Nikkei will touch 20,000 this month,” Nishi said.
While the Topix edged up, falling issues outnumbered rising ones 1,058 to 672 on the first section, with 130 issues unchanged.
Volume increased to 2.315 billion shares from 2.170 billion Monday.
Sharp plunged 3.54 percent on dilution concerns following media reports Tuesday that the major electronics-maker plans to ask main creditor banks for debt-for-equity swaps.
Mega-bank groups Mitsubishi UFJ, Mizuho and Sumitomo Mitsui came under continued profit-taking pressure, brokers said.
On the other hand, restaurant operator Saizeriya shot up 6.47 percent thanks to a sharp same-store sales increase in February, brokers said.
Also on the plus side were defensive issues, including drugmakers Takeda and Astellas, along with daily goods manufacturer Kao and NH Foods.
In index futures trading on the Osaka Exchange, the key March contract on the Nikkei average slumped 40 points to end at 18,820.