Nikkei eases, investors cautious after recent sharp rally

TOKYO Tue Dec 11, 2012 4:11pm IST

A visitor walks near the logo of the Tokyo Stock Exchange in Tokyo November 5, 2012. REUTERS/Issei Kato

A visitor walks near the logo of the Tokyo Stock Exchange in Tokyo November 5, 2012.

Credit: Reuters/Issei Kato

Related Topics

Stocks

   

TOKYO (Reuters) - Japan's Nikkei share average dipped on Tuesday, although it held above the key 9,500-mark, as investors stayed cautious over signs that the index is overbought after a near 10 percent rally over the past month.

The Nikkei .N225 ended 0.1 percent lower at 9,525.32, but supported by its five-day moving average at 9,520.09.

The fall took the index away from "overbought" territory, but its 14-day relative strength index still stood near 70, a level which is deemed overbought and often signals possible near-term pull back.

The benchmark has risen 9.9 percent over the past month while the yen has softened after Shinzo Abe, the leader of the main opposition party which is expected to win a December 16 election, called for aggressive policy action from the Bank of Japan, including embarking on "unlimited easing".

Exporters have benefited the most, but lately investors started to take some profits on them. Among those which succumbed to profit-taking on Tuesday were Honda Motor Co (7267.T), Nissan Motor Co (7201.T), Sony Corp (6758.T) and Daikin Industries (6367.T), down between 0.7 and 1.5 percent.

"We probably need a bit of pull back before it can take the next leg higher," said a Tokyo-based analyst, who declined to be identified. "We probably hold 9,000 ... The volume is getting pretty thin in the run-up to the year end."

According to Reuters data, Tuesday's most-traded Nikkei index was a put with a strike price of 9,250 JNI092X2.OS, a 2.9 percent downside from the current closing level, and a December maturity.

The next most-traded was a December call at 9,750 JNI097L2.OS, followed by another December put at 9,500 JNI095X2.OS.

But some market participants said investors, who have missed the rally, may be forced to go long, which will help support the market.

"Some funds which invest in Asian funds have failed to chase the market higher over the past month as the market started rising too fast ... they could not make a quick investment decision," said Kenichi Hirano, a strategist at Tachibana Securities.

"Now they are trying to catch up with the rises and add more long positions on Japanese stocks when they fall."

Boosted by the rally in the past month, the Nikkei is up 12.7 percent this year, in line with the U.S. S&P 500 .INX but lagging a 14.3 percent rise in the pan-European STOXX Europe 600 .STOXX.

The broader Topix .TOPX index eased 0.3 percent to 786.07 in light trade on Tuesday, with 1.54 billion shares changing hands, down from Monday's 1.94 billion and last week's daily average of 1.91 billion.

Fuji Heavy Industries Ltd (7270.T) lost 1.8 percent after J.P. Morgan downgraded the Subaru-brand carmaker to 'neutral' from 'overweight', but rival Suzuki Motor Corp (7269.T) climbed 4.1 percent after Deutsche Bank lifted its price target on the automaker.

Power utilities suffered on news that Japan Atomic Power Co, in which the firms hold a stake, may have to decommission one of its reactors after seismologists concluded the plant in western Japan is sitting over an active faultline.

Kansai Electric Power Co (9503.T), Chubu Electric Power Co (9502.T), Hokuriku Electric Power Co (9505.T) and Tokyo Electric Power Co (9501.T) shed between 1.4 and 4.4 percent.

(Additional reporting by Ayai Tomisawa; Editing by Sanjeev Miglani)

FILED UNDER:

REUTERS SHOWCASE

WTO Trade Deal

WTO Trade Deal

WTO clinches first global trade deal in its history  Full Article 

Kashmir Attack

Kashmir Attack

Ten dead in Kashmir's worst militant attack in more than a year  Read 

OPEC Meeting

OPEC Meeting

Saudis block OPEC output cut, oil price sinks further.  Full Article 

GDP, RBI Preview

GDP, RBI Preview

GDP growth set to weaken, business wants reforms more than rate cut  Full Article | Related Story 

Social Media

Social Media

Twitter to start tracking users' mobile apps  Full Article 

Jaitley to Rajan

Jaitley to Rajan

Jaitley likely to meet Rajan on Monday to urge rate cut  Full Article 

Banking Sector

Banking Sector

India moves to allow more businesses to offer basic financial services.  Full Article 

Forever21 in India

Forever21 in India

Forever21 sets sights on Indian cities, but please hold the hot pants  Full Article 

Japan Economy

Japan Economy

Japan inflation slows in October, output and spending show signs of recovery  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage