Nomura Securities has raised its year-end target for Japan's benchmark Topix index from 4,200 points to 4,400 points. The upward revision is driven by the firm's increased earnings per share (EPS) forecasts for companies, supported by product price hikes, higher sales volumes, and a weaker yen.

"We remain bullish on the upward trend in the Japanese stock market, as EPS growth will be underpinned by multiple factors, including product price increases and share buybacks," Nomura's chief equity strategist Tomochi Kitaoka said in a research note on Monday. The firm has raised its forecast for the year-on-year EPS growth rate of Topix index constituents for fiscal 2026 from 13.4% to 19.2%.

The institution estimates that roughly half of the recent improvement in corporate profit margins comes from temporary factors such as currency effects and tariff rebates, while the other half stems from price hikes and volume growth, which are considered sustainable. Backed by corporate buybacks, as well as buying from individual investors and overseas funds, the supply-demand balance in the market remains tight. Nomura has also raised its year-end target for the Nikkei 225 index from 68,000 points to 70,000 points.