The Tokyo stock market appears to be crawling out of a correctional phase.

The market was hit with a setback in mid-February as many shares plummeted. The market capitalization of Hikari Tsushin, for example, has been cut in half from around 7 trillion yen.

The downturn of the key Nikkei average has been led by drops in stocks with large market capitalization. It may also be due in part to weaker-than-expected gross domestic product figures for the October-December quarter.

But it is fair to say that market corrections are nearing an end, with the Nikkei average having fallen to just above 19,000 in mid-March.

The yen's stabilization is helping to improve sentiment.

While some investors may be discouraged by extraordinary losses, others may see them as a positive sign of efforts to improve financial health.

Many companies are expected to report extraordinary losses on underfunded reserves for future retirement benefit payments and valuation losses on stockholdings ahead of changes in accounting rules in fiscal 2000.

Since favorable corporate earnings are broadly anticipated, stock trading appears likely to show firm trends.

Among macroeconomic factors, market attention will be focused on whether the Bank of Japan's "tankan" quarterly business sentiment survey, due out in early April, will confirm a pickup in corporate capital spending.

On the supply-demand front, the successive establishment of investment trusts to absorb postal savings fixed-term deposits, a large number of which will begin to reach maturity in April, will prop up the market.

Foreign investors are not as enthusiastic about Japanese stocks as last year because value stocks, or those quoted lower than their due prices, are picking up on their home markets. Nevertheless, foreigners appear likely to continue playing a major role in daily activity.

The downside risk of the market will subside in April as sales for liquidation of cross-shareholding ties and book-closing purposes will come to an end.

Although the upside of certain information issues will remain heavy, the Nikkei average could steadily rise above 20,000 on favorable corporate earnings prospects.