Nikkei falls sharply on position-adjusted sales

Stocks fell on Tuesday, the last trading day of fiscal 2014, weighed down by a wave of position-adjustment selling and profit-taking.

The Nikkei 225 average lost 204.41 points, or 1.05 percent, to end at the day’s low of 19,206.99. On Monday, the key market gauge climbed 125.77 points.

The Topix fell 14.66 points, or 0.94 percent, to 1,543.11, after rising 4.99 points the previous day.

For the whole of fiscal 2014, the Nikkei average surged 4,379.16 points, or 29.53 percent, and the Topix index jumped 340.22 points, or 28.28 percent.

Tokyo stocks opened higher on Tuesday after U.S. and European equities rose overnight and the yen eased against the dollar.

After the initial buying ran its course, however, the key indexes headed lower due to increased profit-taking, brokers said.

They moved in confined ranges around the previous day’s closing levels in the early afternoon amid a dearth of fresh incentives to shore up the market, brokers said.

Stocks accelerated their downswing later in afternoon trading, dragged down by selling by investors who wanted to adjust positions and to lock in profits at the end of the fiscal year, brokers said.

Investors were unable to step up purchases before the Bank of Japan’s tankan quarterly business sentiment survey is released on Wednesday, brokers said.

Analysts expect that the diffusion index for large manufactures’ current business conditions will show a moderate rise on the back of recoveries in exports and corporate earnings. Investors are also focusing on the fiscal 2015 capital spending plan of major companies, which will be announced for the first time in a tankan survey, they said.

“Still, the market’s downside was supported by buying on dips,” said Hiroaki Hiwada, senior strategist at the Investment Research Division of Toyo Securities Co. “From tomorrow, buying at the start of the new fiscal year is likely to boost stocks.”

At the same time, Hiwada said. “The unstable Middle Eastern situation and the Greek debt problem may serve as risk factors, although they are unlikely to have a direct impact on the Tokyo market.”

Falling issues outnumbered rising ones 910 to 836 in the TSE’s first section, while 130 issues were unchanged.

Volume increased to 2.364 billion shares from Monday’s 2.102 billion shares.

A wide range of issues came under profit-taking pressure, including the domestic demand-oriented names that had drawn buying appetite recently. Among them were railway operators JR East and JR Tokai, drug makers Eisai and Astellas Pharma, as well as food companies Ajinomoto and Kikkoman.

Mega-bank groups Mitsubishi UFJ, Mizuho and Sumitomo Mitsui were downbeat.

On the other hand, Fujifilm Holdings rose sharply after the company announced Monday an agreement to acquire a U.S. developer and producer of induced pluripotent stem cells, or iPS cells, for $ 307 million.

Also on the plus side were tire-maker Bridgestone, construction machinery-maker Komatsu and Japan Airlines.

In index futures trading on the Osaka Exchange, the key June contract on the Nikkei average slumped 200 points to end at 19,230.

Nikkei Futures

nikkeifutures.org@imediaone.com

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