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Nikkei likely to rise slightly this week

TOKYO: Japanese stock prices are expected to rise slightly this week on buying by new investment trusts and dealers trying to boost their portfolio performances for the fiscal year ending on Friday.

"The market was weighed down last week by selling of cross-held shares and cautious moves by institutional dealers in preparation for book closings, but with that pressure lifted, the market should seriously try closing above the 20,000 level again," said Hitoshi Ichio, strategist at Commerz Securities in Tokyo.

Most traders expect the benchmark Nikkei average to trade in a range of 19,500 to 20,500 during the week.

The Nikkei closed on Friday at 19,958.08, up 1.29 percent on the day and 2.0 percent on the week. It briefly recaptured the 20,000 mark for the first time since March 6 as institutional investors who avoided opening new positions during the past week returned to the market.

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Traders warned gains could be limited by the risky outlook for high-tech and Internet heavyweights such as Softbank Corp 9984.T and Hikari Tsushin Inc, which could weigh especially on the capital-weighted TOPIX index.

"Sentiment is basically bullish but some key high-tech issues seem to be stuck in a corrective mode and that could keep pressuring the overall market," said Masaaki Higashida, deputy general manager at Nomura Securities.

A report in the Nihon Keizai Shimbun that Softbank would raise some 300 billion yen through an issue of new shares at market prices drove it down 13.86 percent on Friday to 87,000 yen, less than half its record high of 198,000 reached in February.

Softbank later denied the report, stating it had not made any decision on a capital increase at present, according to Jiji Press,.

Nihon Keizai Shimbun said Softbank's new share issue -- one of the largest by a listed Japanese firm -- would be carried out next month in part to finance fresh investment in Internet startups. "It seems that Softbank shares have entered a vicious cycle," said Makoto Ueno, an industry analyst at Daiwa Institute of Research. "It's among issues moving on market momentum, not fundamentals. People buy those just because they are rising. So when it starts falling, people jump to sell."

Investors had already been taking another look at the valuation of Internet-related firms recently, especially in Softbank and Hikari Tsushin which mainly generate cash from capital gains of holdings in other firms instead of its own operations.

Traders also said they would keep a cautious eye on Sony Corp 6758.T movements this week, as its two-for-one share split due in May is valid for shareholders as of March 31.

The start of new investment trusts, which have been advertised as focusing on "value" stocks, are expected to give investors an incentive to buy small to mid-sized shares.

Five new equity-oriented investment trusts were launched last Friday and several more are scheduled to be launched this week.

"No one knows for sure which issues qualify as 'value' stocks, so buyers will be buying both blue chips and smaller shares in relatively good financial health," said an equities manager at a local brokerage. "This means we'll be seeing strong reactions to good corporate news."

Reports that Japan's Mitsubishi Motors Corp has agreed to give a minority controlling stake to DaimlerChrysler AG, creating the world's third biggest auto-making group, were expected to have limited market impact as their talks had already been highly publicised last week.

On the technical front, analysts pointed out the Nikkei had risen above the 25-day moving average in the past few sessions, signalling an upward trend for the mid-term. But they also the 20,000 level could become a harder hurdle if the Nikkei fails to close above it after a few more attempts.-Reuters