The balance of stocks sold short turned higher last week after the previous week's buying frenzy to cover short positions subsided.
The outstanding balance of short sales stood at 1.09 trillion yen at the end of the week, up 84.6 billion yen from a week before, industry figures show.
The upturn followed a 45.84 billion yen drop the previous week, itself the first fall in three weeks.
Short selling, which involves borrowing shares from securities finance companies, institutional investors and brokers in the hope of buying them back when prices fall, is considered to be a major factor behind the market's recent volatility.
As part of a drive to counter deflation, the government has tightened its controls on short selling, prompting investors to buy back borrowed shares to unwind their short margin positions in recent weeks. Some investors, including hedge funds, have often benefited from a decline in the market by selling shares short.
The balance of shares bought on credit, on the other hand, turned lower.
The balance of long margin positions dropped below the 1 trillion yen level again to 978.31 billion yen, down 22.94 billion yen from a week earlier. As a result, the long-short ratio dropped to 0.89 from 0.99.
Still, the tightened controls on short sales have helped underpin falling share prices.
Riding high on the crest of a strong pickup in market liquidity, share prices rose across the board last week.
The benchmark 225-issue Nikkei average ended the week at 10,812.00, up 455.22 points, or 4.4 percent, from a week before.
Daily trading value on the first section of the Tokyo Stock Exchange averaged 725.9 billion yen, up from 596.1 billion yen the previous week.