Foreign investors turned net buyers of Japanese stocks for the first time in five weeks last week.
Nonresidents bought 89.76 billion yen more than they sold in a turnaround from net sales of 117.13 billion yen the previous week, according to industry figures.
The turnaround was largely technical, brokerage officials said, voicing skepticism about a further pickup in foreign buying.
There were indications that new government restrictions on short selling have prompted foreign investors, including hedge funds, to buy back Japanese stocks, according to sources.
After having unwound their Japanese portfolios for months, nonresidents began adjusting their oversold positions, said Toshihiko Matsuno, an analyst with Sakura Friend Securities Co.
Many domestic players remained net sellers last week.
With the March end of the fiscal year drawing near, banks, institutional investors and nonfinancial businesses were busy unwinding their cross-shareholdings.
City banks, long-term credit banks and regional banks as a whole were net sellers for the 20th straight week.
Life and casualty insurance companies were net sellers for the seventh consecutive week.
Individual investors turned sellers for the first time in six weeks, registering 72.76 billion yen in net sales, against 71.68 billion yen in net buying the previous week.
Running against the general trend among domestic players, trust banks were net buyers for the second week in a row, reflecting a pickup in the flow of money from pension funds.
They chalked up 64.11 billion yen in net buying last week, on top of 1.67 billion yen the previous week.