Nikkei edges up 0.3 percent, Fast Retailing rises

By Masayuki Kitano

TOKYO (BestGrowthStock) – Japan’s Nikkei average rose 0.3 percent on Friday, with gains in retailers offsetting profit-taking in the wake of the index’s recent rally to 18-month highs.

Retailers (.IRETL.T: ) were among the leading sub-index gainers, with casual clothing chain Fast Retailing (9983.T: ) surging after reporting 43 percent growth in its first-half operating profit, helped by strong sales at its Uniqlo budget fashion chain.

The Nikkei hit an 18-month peak earlier this week but has since pulled back, with investors booking profits as the yen regained some ground after a recent slide, and due to concerns the rally in equities may have gone too far, too fast.

But market players said it was too early to conclude whether the Nikkei has shifted toward a downtrend, with support expected near 10,900, roughly where its 25-day moving average now lies.

“Moves in the foreign exchange market (Read more about international currency trading. ) have settled down, and I think we could see some renewed buying if the yen were to start falling again,” said Hajime Nakajima, deputy general manager for Cosmo Securities’ equity department.

Hopes for possible buying by two mutual funds to be launched by Nomura Asset Management on April 16 that will invest in so-called smart grid and cloud-computing related equities around the world, may also lend the market support in the near-term, Nakajima said.

The benchmark Nikkei (.N225: ) rose 36.14 points to 11,204.34, recouping some ground after sliding 1.1 percent on Thursday for its biggest one-day percentage fall in about six weeks.

The broader Topix index (.TOPX: ) rose 0.4 percent to 989.42.

Some 2.2 billion shares were traded on the Tokyo exchange’s first section, off a one-month high of about 2.4 billion shares reached on Wednesday. Advancing shares outnumbered declining ones by more than 2 to 1.

The Nikkei hit an 18-month intraday high of 11,408.17 on Monday, buoyed by market expectations for a sharp improvement in corporate earnings and signs of a strengthening economic recovery in the United States.

But MACD, a technical indicator, has since turned cautious, with charts showing the MACD line edging down toward the signal line and getting closer to flashing a sell signal.

RETAIL RISE

Japan’s largest retailer Seven & I Holdings (3382.T: ) climbed 6.1 percent to 2,456 yen after saying it would buy back up to 50 billion yen ($535.6 million) of its stock, equivalent to 2.21 percent of its shares outstanding and then cancel them.

Bic Camera Inc (3048.T: ) jumped 6.7 percent to 34,450 yen after the consumer electronics retailer raised its full-year operating profit forecast by 20 percent, buoyed by brisk sales of high margin items like flat-screen TVs thanks to government incentive programs designed to encourage purchases of energy efficient models.

Canon Inc (7751.T: ) fell 2.8 percent to 4,250 yen after Goldman Sachs downgraded the electronics maker to “neutral” from “buy,” though it raised its price target to 4,500 yen from 4,200 to reflect upward revisions to its estimates for the business year ending in December 2010.

Kenichi Hirano, operating officer at Tachibana Securities, said that while the Nikkei could dip to the level of its 25-day moving average, currently at just over 10,900, it is unlikely to break through it at this point unless some fresh selling factor emerges.

“Even if there is a little selling, it’s unlikely the market will slide that much. Neither institutional investors nor foreigners, who have been such active buyers this year, appear much interested in heavy selling,” he said.

Stock Market Report

(Additional reporting by Elaine Lies; Editing by Joseph Radford)

Nikkei edges up 0.3 percent, Fast Retailing rises