”Estimating the upper limit of the current market range for the Nikkei Average”

4th February, 2021

As mentioned in the 25th January issue of this weekly report, “Is the official inauguration of the new president a turning point between ‘expectation’ and ‘reality’?”, it seems that the sentiment surrounding the stock market has changed from around the 20th of this month.  In fact, on 21/1, the US Dow Jones Industrial Average hit a record high of 31,272 points since last year.  On 14/1, the Nikkei Average hit a record high of 28,979 points since last year, but struggled around the 28,600 points level after that, and as seen in its downward acceleration on 29/1 at the end of the month, people are generally wary of the inauguration day.

When forecasting or estimating the immediate high of the Nikkei Average from the price chart perspective, it is important to first estimate the mid-price of the market range.  By assuming that the upper and lower limits of the market range are in the same price range from the mid-price, once the past mid-price and the lower limit of the market range are determined, the upper limit of the current market range can theoretically be determined.  In addition, the mid-price is likely to correspond to the price within the price range between downside support and upside resistance that many market participants used to be strongly aware of.  If we were to estimate the market range in the time frame after November 2017, it is clear that the lower limit is the low of 16,358 points in March last year, and the candidates for the mid-price are 22,500 points or 23,000 points.  For calculation purposes, the upper limit of the market range would be 28,648 points assuming a mid-price of 22,500 points, and 29,648 points assuming a mid-price of 23,000 points.  One of the reasons why the Nikkei Average has been struggling around the 28,600 points level in January is that the market is aware of the past mid-price of the market range of 22,500 points.

In addition, taking into account the impact of the US presidential election, we can use the low of 22,948 points on 31/10 last year as the lower limit to estimate the current market range.  In such a case, it is possible to estimate that the mid-

price would be around 26,000 points, if we consider the decline to 20/11 after the rise to the high of 26,057 points on 17/11 as a turning point.  In that case, calculation shows that the upper limit of the market range is near 29,000 points, which is close to the high of 28,979 points on the 14th of this month.

Stock market sayings and anomalies, such as “hitting the ceiling beginning of spring and hitting the bottom during equinoctial week” and “January effect”, are widely known.   We should consider the possibility that such sayings and anomalies may apply to some extent this year, as happened in 2018 and 2020.  This year’s Chinese New Year (Spring Festival) in China is supposed to be a seven-day holiday from 11-17/2.  As a result of the Chinese government’s calls for people to refrain from returning home, the number of travelers may be lower than usual.  However, it is expected that people will continue to travel back home from the 28th of this month until early March.  Even if we see an adjustment phase in Japanese stocks, there is a possibility that the adjustment will be complete around the end of the Spring Festival and the market will turn to buying.

In the 1/2 issue, we will be covering DIC (4631), Nissha (7915), Anicom Holdings (8715), and Innotech (9880).


  • DIC Corp (4631)        2,565 yen (29/1 closing price)

・A chemical manufacturer founded in 1908 for the manufacture and sale of printing inks.  Formerly known as Dainippon Ink & Chemicals.  Top global market share in printing inks, organic pigments and PPS compounds.  Expanding into resins and electronic materials businesses. 

・For 9M (Jan-Sep) results of FY2020/12 announced on 13/11, net sales decreased by 10.8% to  514.308 billion yen compared to the same period the previous year, and operating income decreased by 13.2% to 25.577 billion yen.  Although declining in the July-September period, sales increased 5.2% QoQ as the spread of infection had subsided over a wide area, and shipments of inks for publishing and materials for automobiles were on a recovery trend. 

・For its full year plan, net sales is expected to decrease by 8.9% to 700.0 billion yen compared to the previous year, and operating income to decrease by 15.3% to 35.0 billion yen.  Expected to increase sales by 8.9% and operating income by 21.7% QoQ in the October-December period.  Announced on 25/1 the development of a thermoplastic material for 3D printers with antiviral and antibacterial functions.  The 3D printer materials market has grown significantly due to factors such as the progress of technological innovation in molding methods, the diversification and sophistication of materials, and the expansion of applications from prototypes to finished products.  Demand for this market is also increasing due to the risk of supply chain disruptions.


  • Nissha Co., Ltd (7915)       1,347 yen (29/1 closing price)

・Founded in Kyoto in 1929 and established in 1946.  Mainly engaged in the production and sales of industrial materials, devices, products and services related to medical technology, and information and communication.  The film touch sensor of the Devices business is the mainstay of earnings.

・For 9M (Jan-Sep) results of FY2020/12 announced on 11/11, net sales increased by 1.9% to  128.785  billion yen compared to the same period the previous year, and operating income increased 7.5 times to 3.258 billion yen.  Higher demand for consumer electronics products in the Devices segment and mobility products in the Industrial Materials segment had contributed to higher sales, while cost structure improvements had led to higher profits.

・Company has revised its full-year plan upwards on 11/11.  Net sales is expected to increase by 2.3% to 178.0 billion yen compared to the previous year (original plan 166.0 billion yen), and operating income to return to profitability from minus 16.247 billion yen in the previous year to 5.5 billion yen (original plan 1.5 billion yen).  Under the mid-term management plan focusing on growth through business portfolio reorganization, demand is expected to increase for consumer electronics and mobility products, as well as for other key markets such as medical devices and sustainable packaging materials.


  •  Anicom Holdings, Inc (8715)       1,135 yen (29/1 closing price)

・Established in 2000.  Core business is damage insurance centering on pet insurance, which has the largest market share in Japan.  Other businesses include veterinary hospital support services, insurance agency services, and research and clinical services in the field of veterinary medicine.

・For 1H (Apr-Sep) results of FY2021/3 announced on 9/11, ordinary income increased by 17.7% to 23.595 billion yen compared to the same period the previous year, and ordinary profit increased 2.7 times to 1.33 billion yen.  The number of insurance policies had increased 6.7% from the end of the previous period due to strong demand for pet ownership.  In addition, the expense ratio based on existing premiums declined 0.6 percentage points from the same period of the previous year due to scale-up investments emphasizing expense management.

・For its full year plan, ordinary income is expected to increase by 10.0% to 45.6 billion yen compared to the previous year, and ordinary profit to increase by 32.4% to 2.9 billion yen.  In the aftermath of the Covid-19 pandemic, which prevented people from traveling overseas, spending had gone into pet purchases, and that seemed to have resulted in increased awareness for pet insurance.  The expansion of the market can be attributed to a wider range of animals that can be insured, as well as the digitization of veterinary clinic results, which facilitates the acquisition of basic data for setting premiums.


  • Innotech Corp (9880)                  1,230 yen (29/1 closing price)

・Established in 1980.  A trading company specializing in the import and sale of semiconductor design software, semiconductor testers, and electronic components from Europe and the US.  Consists of the Design Development Solutions Business and the Product Solution Business.

・For 1H (Apr-Sep) results of FY2021/3 announced on 9/11, net sales increased by 5.3% to 14.935 billion yen compared to the same period the previous year, and operating income decreased by 26.3% to 456 million yen.  Improved demand for testers for memory devices and sales of payment terminals had contributed to the increase in sales, but sluggish sales of reliability test systems for foundries and contract services for automotive-related businesses had impacted profits.

・For its full year plan, net sales is expected to increase by 2.7% to 32.0 billion yen compared to the previous year, and operating income to decrease by 1.2% to 1.65 billion yen.  With Taiwan Semiconductor Manufacturing Company (TSMC) and other companies reportedly considering raising their prices by up to 15% in response to the global shortage of semiconductors, company has captured demand with its NAND flash memory mass production line.  The shortage of semiconductor supplies should provide a tailwind to the company’s business strategy, which aims to increase sales of its own products by strengthening manufacturing functions.


【Disclaimer and Notes relating to this report】

Issuer of this report:  Phillip Securities Japan, Ltd.    4-2 Nihonbashi Kabutocho, Chuo-ku, Tokyo 103-0026

TEL: 03-3666-2101 URL: http://www.phillip.co.jp/


Authors of this report:

Phillip Securities Research Department 

Kazuhiro Sasaki, Certified International Investment Analyst(CIIA®), Chartered Member of The Securities Analysts Association of Japan (CMA®)


This material is intended for information purpose and does not constitute a solicitation for sale related to financial products.  Phillip Securities receives consideration based on contracts with brokerage firms that provide the reports.  The contents described in this document convey the opinions of the writers as a reference for investment decisions, and Phillip Securities does not guarantee its accuracy and completeness.  Please make final investment decisions at your own discretion.  In addition, Phillip Securities shall not assume liability for any loss or damage arising from usage of part or all of this material.  All rights of this material belong to Phillip Securities and any reproduction, transfer or reprint without permission is prohibited.


<Notification based on the Japan Securities Dealers Association Self-Regulatory Rules [Rules concerning handling of analyst reports dated 25th Jan, 2002]>

There is no serious conflict of interest between the analysts who wrote the reports and the corresponding companies.