Stock trading in Tokyo is expected to show a strong undertone for the time being, with the key Nikkei stock average testing 20,000.
The Nikkei rose above 19,000 on Jan. 4 when the market opened for the year.
Subsequently, trading has become highly volatile, reflecting wild fluctuations on the New York market and the Nasdaq.
As on the Nasdaq, Internet-related stocks and information-processing issues have been erratic, but buying interest is starting to spread on the back of a favorable supply and demand balance.
For example, individual investors, who accounted for a respectable 29 percent of total stock trading last year, are shifting their buying interest to biotechnology-related stocks from information-processing issues.
Institutional investors, such as investment trusts and pension funds, are buying blue chips with relatively low valuation.
While nonresident investors continue to buy Japanese shares, trust banks set a record buying excess in December, reflecting increased purchases by pension funds and active establishment of investment trusts.
As a whole, the supply and demand balance remains favorable on the Tokyo stock market.
U.S. stocks appear unlikely to cause a major disturbance because a possible decision to raise U.S. interest rates by up to half a percentage point at the Feb. 1-2 meeting of the Federal Open Market Committee has already been discounted in light of a rise to the 6 percent level in the April settlement of federal funds rate trading.
Low-priced stocks, which have been sold since last year amid the polarization of the market, are ceasing to decline.
However, only those that are improving earnings by concentrating management resources on selected operations are expected to continue rising.
The market will see bargain-hunting of information-processing stocks, steady purchases of blue chips and selective buying of issues seeking renewed growth through management reform.