The balance of shares bought on credit rose for the fifth consecutive week last week as investors continued hunting for bargains.
The outstanding balance of margin debts stood at 1.03 trillion yen, up 1.1 billion yen from a week earlier, according to industry figures.
A broad array of shares dropped to attractive price levels in recent weeks, prompting individual investors to borrow from brokers to buy stocks.
Their purchases helped shore up share prices, providing a floor for the falling market, brokerage officials said.
Buyers on margin opted for long-battered banking and high-tech issues plus incentive-backed cyclical shares, including Sumitomo Mitsui Banking, NEC, Fujitsu and Sumitomo Metal Industries.
The Tokyo Stock Exchange's recent rally was technical, fueled largely by margin-buying and position adjustment on short-selling, said Hiroshi Sato, equity investment manager at Cosmo Securities Co.
A news report that the government is putting the finishing touches on a package of measures aimed at restricting speculative sales prompted investors to build their long positions, while prompting short-sellers to buy back shares, he said.
Sato warned, however, that the rally may soon fizzle when the dust settles.
Some investors, including hedge funds, had been profiting from market declines by selling borrowed shares.
Meanwhile, the balance of shares sold short turned higher, reclaiming the 1 trillion yen level for the first time in two weeks. The balance of short-selling stood at 1.005 trillion yen, up 8.1 billion yen.
Shares sold short heavily included Nippon Steel and other low-priced cyclical issues.