Nikkei flat after rally but eyes more gains; Inpex sinks

* Nikkei flat after nearly 3 pct gain the day before

* Support solid around 9,200, 9,000, more gains eyed-analysts

* Next targets seen around 9,700, 10,251

* MACD pointing upward; slow stochastic up

* Inpex tumbles on $6.7 billion fund-raising

By Aiko Hayashi

TOKYO, July 9 (BestGrowthStock) – Japan’s Nikkei average was almost
flat on Friday after a rally the day before, but market players
said more gains appear to be in store after it moved away from a
seven-month low and held above a key retracement support.

Inpex (1605.T: ) plummeted more than 14 percent to an all-time
low and weighed on the broader market after Japan’s top oil and
gas explorer said it would raise up to $6.7 billion via a global
share offering, diluting the value of existing shares by more
than 50 percent.

The share sale is the biggest equity financing deal by a
non-financial company in Japan this year, according to research
company Dealogic. [ID:nTOE66706N]

Investors pointed to charts of the Nikkei, which has remained
solidly above the key support level of 9,200, a 50 percent
retracement of its move up from its March 2009 low to its April
2010 high. It has also tested 9,000 three times recently, making
that level strong support.

Weeks of dismal economic reports, U.S. jobs data last week
and further strengthening in the yen had hit market sentiment and
exacerbated a bearish trend for the Nikkei since April.

“The market has factored in worries about Europe and the
possibility of a double dip in the U.S. economy, and it’s now
most likely found a floor,” said Kazuhiro Takahashi, general
manager at Daiwa Securities Capital Markets.

“Yesterday’s gains were largely due to short-covering of
futures in thin trade, and the market lacks further strong upward
momentum to keep climbing higher. Also, there’s the upper house
elections at the weekend.”

Japan’s ruling Democratic Party (DPJ) could fall well short
of Prime Minister Naoto Kan’s target in Sunday’s upper house
election, media polls showed, putting the premier’s job at risk
and threatening to stall steps to rein in massive public debt.
[ID:nTOE66707U]

Although market players say they expect little impact from
domestic politics on the Japanese stock market, investors also do
not want to actively take positions right before the elections.

The benchmark Nikkei (.N225: ) added 0.44 points to 9,536.18,
while the broader Topix (.TOPX: ) inched down 0.3 percent to
858.39.

Early this week, the Nikkei slid as low as 9,091.70, just
above the November 2009 low of 9,076 and the July 2009 low of
9,050.

The Nikkei jumped 2.8 percent the previous day, boosted by
short-covering from investors who believe the benchmark’s slide
to a seven-month low this week was overdone.

The Nikkei’s next upward target stands around 9,700, or its
25-day moving average, which is a proxy for a one-month moving
average that is closely watched in Japan. The next target lies
around 10,251, the index’s recent high hit on June 21.

On the charts, the outlook for the Nikkei appears to be
brightening. Its MACD, a measure of market momentum, has started
to pick up, while its slow stochastic — a measure of how
oversold the market is and whether it is in a short-term up or
down trend — has turned higher after falling in June, moving
away from oversold territory.

On Thursday, U.S. stocks (Read more about the stock market today. ) rose about 1 percent after teen
apparel retailers such as Abercrombie & Fitch (ANF.N: ) and
department store chains such as JC Penney Co (JCP.N: ) topped
expectations in their June sales.

Adding to the upbeat mood, initial claims for state
unemployment benefits fell 21,000 to a seasonally adjusted
454,000 in the week ended July 3, the lowest level since early
May, the Labor Department said.

INPEX TANKS

Inpex shares were down 13.5 percent at 412,000 yen, after
losing as much as 14.7 percent to 406,000 at one stage, hit by
the announcement of the massive share offering to finance its
giant Ichthys gas project in Australia.

The share dilution of up to 55 percent is the biggest in four
years since small precision parts maker Cluster Technology Co’s
(4240.OJ: ) deal in 2006, the research company said.

Shares of exporters rose, as the euro was firm (EURJPY=R: )
near a two-week high against the yen at 112.21 yen.

Sony Corp (6758.T: ) rose 0.7 percent to 2,439 yen and TDK Corp
(6762.T: ) gained 0.8 percent to 5,060 yen.

Canon Inc (7751.T: ) gained 1.3 percent to 3,490 yen after the
Nikkei business daily reported it is likely to post a near
three-fold jump in its group operating profit for the
January-June period, boosted by better-than-expected sales of
digital single-lens reflex cameras and laser printers.
[ID:nSGE6670IL]

But Fast Retailing (9983.T: ) fell 0.8 percent to 12,620 yen
after the retailer cut its annual outlook for the first time in
three years after the breakneck pace of growth at its Uniqlo
casual-clothing chain came to a screeching halt, highlighting the
need to focus on business overseas. [ID:nTOE665084]
(Editing by Michael Watson)

Nikkei flat after rally but eyes more gains; Inpex sinks