Nikkei drops on 'overbought' signs; exporters, utilities weak

Mon Dec 10, 2012 10:14pm EST

* Nikkei down 0.3 pct, Topix off 0.5 pct
    * 9,500-level still psychologically important - analyst
    * FOMC eyed - analyst
    * Asian funds' buying limiting drops - analyst
    * Utilities down on Atomic Power's possible decommission of
plant
    * Renesas surges on investment plan

    By Ayai Tomisawa
    TOKYO, Dec 11 (Reuters) - Japan's Nikkei share average
slipped on Tuesday as investors, cautious over signs that the
market is overbought after a 10 percent rally over the past
month, took profits on export-focused firms.
    Investors also held off from taking positions ahead of a
two-day policy meeting of the U.S. Federal Reserve starting
later on Tuesday where it is expected to announce a new round of
Treasury securities purchases, analysts said.
    By the midday break, the Nikkei was down 0.3 percent
at 9,506.29. Its 14-day relative strength index stood at 66.93,
coming off from the previous day, but the market remained
cautious. A level of 70 or above is deemed overbought, and can
often signal a pullback in the near term.
    "The 9,500-level is still an important psychological line
for both support and resistance purposes," said Yutaka Miura, a
senior technical analyst at Mizuho Securities.
    Exporters have led gains in the market over the past month
on the back of a weaker yen, after Shinzo Abe, the leader of the
main opposition which is expected to win a Dec. 16 general
election, called for the Bank of Japan to embark on "unlimited
easing." 
    On Tuesday, exporters led the decline with Honda Motor Co
 falling 1.1 percent, Sony Corp slipping 1.7
percent and Komatsu Ltd dropping 0.9 percent.
    But analysts said that losses should be limited as some
investors were still buying exporters, having missed the rally.
    "Some funds which invest in Asian funds have failed to chase
the market higher over the past month as the market started
rising too fast... they could not make a quick investment
decision," said Kenichi Hirano, a strategist at Tachibana
Securities. 
    "Now they are trying to catch up with the rises and add more
long positions on Japanese stocks when they fall."
    
    UTILITIES SINK
    Power utilities also came under pressure on news that Japan
Atomic Power Co, in which the firms hold a stake, may have to
decommission one of its reactors after seismologists concluded
the plant in western Japan is sitting over an active faultline.
 
    Kansai Electric Power Co sank 6.4 percent and Chubu
Electric Power Co sagged 5.7 percent, while Tokyo
Electric Power Co and Chugoku Electric Power Co
 shed 2.1 percent and 2.4 percent, respectively. 
    Bucking overall market weakness, struggling Japanese
chipmaker Renesas Electronics Corp added 3.6 percent to
319 yen after hitting an intraday high of 350 yen on news that
it will receive 150 billion yen ($1.8 billion) in aid from a
government-backed fund and manufacturers to help it stay afloat.
    The broader Topix index dropped 0.5 percent to 
784.52.
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