The 225-issue Nikkei average's recent reshuffle could continue to unsettle the Tokyo stock market for a while.
The replacement of 30 issues with new components triggered selloffs along a broad front before and after the reshuffle took effect April 24, sending the key market gauge down more than 10 percent in the second half of last month.
The new components accounted for roughly 30 percent of the fall and the other 195 issues for 70 percent.
A broad array of stocks tumbled as investors sold them to raise funds to buy the 30 high-priced newcomers.
Despite their recent falls, however, the new stocks are still 20 percent higher than they were April 14, when the reshuffling was announced, indicating further corrections will be inevitable.
Attention is also focusing on corporate earnings reports.
Overseas, U.S. stocks have almost returned to levels before their recent plunge. Although the April 27 release of U.S. gross domestic product data for the first quarter added to inflation concerns, the Nasdaq composite index has turned higher.
The Tokyo market in general is becoming less affected by unfavorable overseas factors in view of the fact that the broad-based Topix index has returned to its level before the U.S. stock plunge.
Recovery signs are brightening prospects for the Tokyo market, but volatility may be inevitable for some time.