The Nikkei reversed early losses to close higher on Tuesday thanks to buying on dips.
It gained 28.52 points, or 0.15 percent, to finish at 19,671.26. On Monday, the Nikkei surged 377.14 points.
The Topix closed down 1.49 points, or 0.09 percent, at 1,589.48, after gaining 27.38 points the previous day.
Tokyo stocks opened weaker after losses on Wall Street on Monday, weighed down by a downward revision to the Organization for Economic Cooperation and Development’s economic outlook for Japan, the United States and Europe for 2016.
Some worries about market overheating also pressured Tokyo stocks after the Nikkei average rose for four consecutive session through Monday, brokers said.
But stocks resisted further falls thanks to buybacks and buying on dips. Heavily weighted components of the Nikkei average drew purchases, pushing up the key market gauge to positive territory in the afternoon, after a survey report from Japan’s Cabinet Office showed the first improvement in three months in sentiment among so-called economy watchers for October.
The dollar’s stable moves above ¥123 underpinned the market’s downside, brokers said.
“Investors also took heart from a brief rebound in the Shanghai stock market on Tuesday,” said Hiroaki Hiwada, senior strategist at the Investment Research Division of Toyo Securities Co.
In addition, hopes for economic stimulus measures by the Japanese government supported the market, Hiwada said.
If gross domestic product data for July-September show the economy remains sluggish, stimulus measures are expected to be announced by the end of this month, a major securities firm official said. The data is due for release Monday.
“The market is likely to remain on an upward trend unless the Nikkei average falls below its 200-day moving average,” which stood at 19,276.52 as of Tuesday, according to an official of another securities firm.
Despite the Nikkei’s rise, falling issues outnumbered rising ones 1,090 to 701 in the TSE’s first section, while 120 issues were unchanged.
Volume fell to 2,069 million shares from Monday’s 2,514 million shares.
Clothing store chain operator Fast Retailing, medical equipment manufacturer Terumo, air conditioner maker Daikin, drug maker Eisai ended higher after shedding earlier losses.
Toyo Tires & Rubber attracted buybacks and buying on dips a day after it revised up its full-year operating profit estimate.
Japan Post Holdings and its two financial arms rose on a news report that the government plans to raise the cap on deposits at Japan Post Bank and on the amount of life insurance policies at Japan Post Insurance, brokers said.
Other major winners included automakers Toyota and Mazda, banks Mitsubishi UFJ, Mizuho and Sumitomo Mitsui, insurer Dai-ichi Life and drug maker Shionogi.
By contrast, electronics parts producers Murata Manufacturing and Nitto Denko and industrial robot maker Fanuc were downbeat.
In index futures trading on the Osaka Exchange, the key December contract on the Nikkei average climbed 80 points to finish at 19,700.