Tokyo stocks could remain in a consolidation phase until early next month, with the 225-issue Nikkei average moving between 9,500 and 11,000 and the broader-based Topix between 950 and 1,100.

Although the market is obsessed with worries about more business failures, the stepped-up disposal of bad loans at banks could soon provide a floor for falling prices.

It is encouraging to note that the manufacturing sector has begun working off stockpiles of unsold products, clearing the way for a pickup in industrial production.

What's more, the U.S. economy is expected to recover in the April-June quarter.

Although corporate earnings are forecast to show a drop of more than 25 percent in consolidated pretax profits in the current fiscal year, a double-digit profit increase is likely in the next fiscal year, with the electric machinery sector serving as the locomotive of the earnings upturn.

The stock market recovery will be led by blue-chip, large-capitalization stocks, especially those in the high-technology sector, and stocks sensitive to economic activity in light of expectations of a rapid improvement in corporate earnings in the next fiscal year, U.S. economic recovery and a weak yen.

Among long-neglected domestic demand-related stocks and low-priced issues, prices are expected to rebound sharply for companies with strong earnings, firms that have been pushing ahead with restructuring and winners in their own market sectors.