Nikkei

Key Highlights

• Nikkei is the leading index of Japanese equities, comprising 225 major publicly-owned companies in Japan, and serves as a key indicator of Japan’s stock market performance.
• Established in 1950, the Nikkei 225 reflects Japan's economic cycles, with milestones like its peak in 1989 and significant drops during financial crises.
• The Tokyo Stock Exchange operates from 5:30 AM to 11:30 AM IST, allowing Indian investors to track the market before Indian exchanges open.
• Investment options include ETFs, international mutual funds, direct investment in Japanese stocks, and Nikkei futures, with consideration for currency risk and regulatory compliance.

What is Nikkei?

Nikkei is the most widely quoted average of Japanese equities and is considered the leading indicator of the performance of the Japanese stock market. The index is composed of 225 large, publicly-owned companies in Japan, including well-known firms such as Toyota, Sony, and SoftBank. The Nikkei 225 is similar to the Dow Jones Industrial Average (DJIA) in the United States and is calculated daily by the Nihon Keizai Shimbun (Nikkei) newspaper.

Full History - Nikkei 225

The Nikkei 225, first established on September 7, 1950, has become one of the most widely followed indices in Asia. Named after the Nihon Keizai Shimbun (Japan Economic Newspaper), known as the Nikkei, the index is both sponsored and compiled by this publication. Over the decades, the Nikkei 225 has experienced significant fluctuations, reflecting Japan's economic cycles, including the post-war boom, the asset price bubble of the late 1980s, and subsequent periods of stagnation and growth. Notable milestones include reaching an all-time high of 38,957 points on December 29, 1989, during the bubble economy, and significant drops during financial crises such as the 2008 global financial crisis.

Nikkei Opening Time in India

The Tokyo Stock Exchange operates Monday through Friday and is open from 9:00 AM to 3:00 PM Japan Standard Time (JST), with a lunch break from 11:30 AM to 12:30 PM JST. For Indian investors, the TSE opens at 5:30 AM and closes at 11:30 AM Indian Standard Time (IST). This timing allows Indian traders and investors to follow the Japanese market in real time before the Indian stock exchanges open.

How to Trade or Invest in Nikkei 225 from India?

Investing in the Nikkei 225 from India can be accomplished through several methods. Here are the primary ways to gain exposure to this Japanese stock market index:

1. Exchange-Traded Funds (ETFs)

ETFs are one of the most straightforward ways to invest in the Nikkei 225. These funds track the performance of the index and are traded on various stock exchanges.

• Identify a Suitable ETF: Look for ETFs that track the Nikkei 225, such as the iShares Nikkei 225 ETF.
• Open a Trading Account: Obtain an account with a broker that offers access to international markets.
• Make Trades with Your Broker: Access your trading account to buy shares of the ETF. Many Indian brokers offer international trading facilities.

2. International Mutual Funds

Certain Indian mutual funds invest in international indices, including the Nikkei 225.

• Research Mutual Funds: Look for Indian mutual funds with international exposure, particularly those focusing on Asian markets or Japan.
• Invest Through a Fund House: You can invest in these mutual funds through fund houses or brokers.

3. Direct Investment in Japanese Stocks

Some Indian brokers provide the facility to invest directly in Japanese stocks, which can give you exposure to the companies in the Nikkei 225.

• Open a Brokerage Account: Choose a broker that offers international trading services.
• Buy Stocks Directly: Invest in individual stocks listed on the Tokyo Stock Exchange.

4. Rupee-Denominated Nikkei Futures

Some Indian exchanges might offer futures contracts based on the Nikkei 225 index.

• Open a Futures Trading Account: With a broker that offers access to these contracts.
• Trade Futures: Use your account to trade futures based on the Nikkei 225.

Key Considerations

• Understand the Market: Ensure you have a good understanding of the Japanese market and factors affecting it.
• Currency Risk: Be aware of the currency risk involved, as fluctuations between the Japanese Yen and Indian Rupee can impact your returns.
• Regulatory Compliance: Ensure all investments comply with Indian regulations on foreign investments.
• Diversification: Consider diversifying your investments to mitigate risks associated with investing in a single foreign index.