The Nikkei closed at the highest level in a month

Japanese stocks closed at their highest levels in a month on Tuesday, even as profit-taking emerged with the Nikkei index rising again above the key 33,000-point level and speculation about new stock sales weighed on sentiment.

The Nikkei 225 index closed up 0.3% to 33,036.76 points after moving around the psychological level of 33,000 points for the first time in more than a month during the session.

The broader Topix index rose 0.17% to 2,377.85 points after renewing its highest level in 33 years when it reached 2,379.57 points.

Both indices recorded a 7-day winning streak, the longest period since mid-May.

GFE Holdings topped the declining stocks on the Nikkei index by a wide margin, falling 6% after the Nikkei newspaper said that the steel maker is seeking to raise up to 120 billion yen, equivalent to $818.39 million, through a public offering of shares and 90 shares. Another billion yen through the offering of five-year convertible bonds to international investors in September.

The company later announced that its board of directors had approved a plan to raise funds worth 211.4 billion yen, including a stock offering worth 121.5 billion yen.

The iron and steel sector was the worst performer of all among the 33 industrial groups on the Tokyo Stock Exchange, falling more than 2.5% at one point and closing down 1.08%. It was the main gainer yesterday, Monday, with an increase of 4.11%.

“I'm not surprised to see some weakness in the market today,” said Kenji Abe, equity strategist at Daiwa Securities. He added that Japanese stocks performed very well, and it is very natural for investors to reap some profits.

At the same time, he said that the GFE news raises concerns about the balance of supply and demand for Japanese stocks. Now, stock prices are high, so I think more companies may consider issuing new shares, he added.

Overall, Abe expects the Nikkei to gradually rise towards its end-March forecast of 35,000, supported in the near term by upward revisions to analysts' earnings estimates after a strong earnings season this summer.