Japanese share prices closed above the 14,000 points level Friday for the first time since May 2001 helped by strong corporate results, gains on Wall Street and the weaker yen, which is at a two-year low against the dollar.
Over the week the main indices soared by over five percent and the Tokyo market is likely to remain firm this week amid strong interest among foreign investors, dealers said.
"Japanese stock market may try to move higher at the beginning of the this week, inheriting the positive trend from this week," said Masatoshi Sato, senior strategist at Mizuho Investors Securities.
But the outlook for Japanese shares would depend on the performance of US stocks, he said. If Wall Street remained steady, Japanese shares would stay around the 14,000 points level.
Japanese stocks are also expected to be influenced by domestic economic indicators towards the end of this week.
Japan will release its September machinery orders on Thursday and preliminary gross domestic product (GDP) for the September quarter on Friday.
Forecasts for both figures are expected to show a slowdown in activity, dealers said.
"Japanese shares may be weighed down if the figures come out in line with the forecasts," said Kazuhiro Takahashi, equity general manager at Daiwa Securities SMBC.
Morgan Stanley economist Takehiro Sato forecast Japanese GDP growth in the third quarter of 0.5 percent from the previous three-month period, against an expansion of 0.8 percent in the second quarter. "GDP seems to be solid, notwithstanding deceleration in areas such as personal consumption," he wrote in a note to clients.
The market is also expected to continue to react to company results, with many Japanese heavyweights lifting their full-year earnings forecasts.
Japan Airlines, Fuji Heavy Industries, NTT and Mitsubishi Motors are among companies due to release results this week.
Nakai expects the Nikkei-225 index to hover around the 14,000 points level and Takahashi forecasts a range of 14,100 to 14,200 if a strong US employment report provides support for US shares.
For the week ending November 4, the Tokyo Stock Exchange's benchmark Nikkei-225 index gained 729.42 points or 5.47 percent to 14,075.96.
The broader TOPIX index of all first section shares rose 75.15 points or 5.29 percent during the week to close at 1,494.99.