TAKENORI MIYAMOTO, Nikkei staff writer

TOKYO — Despite a dip Wednesday in the Nikkei Stock Average, few market players are sounding the alarm, since foreigners are frantically buying stock index futures in an apparent bid to keep up with the bull market.

The index closed down more than 100 points for the first time in some time Wednesday. At one point in the morning, it had fallen 200 points from Tuesday’s close. But in the afternoon, as soon as traders saw a floor, they started snapping up Topix futures, gradually narrowing the decline in cash stocks as well.

Some probably expected another buyer to appear later and moved to get a step ahead, said Masato Futoi of Tokai Tokyo Securities.

Futures for Topix, the index tracking the first section of the Tokyo Stock Exchange, had advanced for 16 straight trading days through Tuesday, aside from Feb. 23 when they were flat. Overseas investors drove this steady rise. Net purchases came to 1.2 trillion yen ($9.95 billion) in the first three weeks of February, with open interest in benchmark contracts reaching the highest level in nearly 21 months.

Such surges of futures buying by foreign investors have been seen occasionally during the market’s recent rally. February’s jump differed in that net buying of Topix futures was higher than that of Nikkei average futures.

Nikkei average futures are favored by hedge funds and other short-term investors for their high liquidity, while Topix futures are more likely to be bought by long-term investors. In many cases, after investors temporarily boost their Japan exposure via futures, they sell the futures and buy cash stocks to incorporate them into their portfolios.

Buying of Topix futures is thus viewed as a sign that the inflow of long-term investment money will increase, which is giving rise to optimism.

The market won’t fall far from today’s correction, said Takashi Fujikura of Daiwa Securities.

Buy orders from foreign investors, who showed little interest in Japanese stocks until January, started cropping up just in the past few weeks, according to Naohide Une of Goldman Sachs Japan.

What sparked the about-face was that in dollar terms, the Nikkei average broke through a longtime ceiling and started to climb, Une said.

The index, which had risen on the weak yen alone, had underperformed against U.S. stocks in terms of dollar-denominated investment returns. Overseas long-term investors, who rarely use currency hedges, thus had few reasons to hold Japanese stocks.

But once the Nikkei average started to rise in dollar terms and Japanese stocks looked comparatively more attractive, foreigners suddenly saw a risk in not getting on board, Une said.

However, this development is partly a cautious strategy to avoid missing global investment benchmarks. Foreign investors see that the Government Pension Investment Fund and other public pension funds are raising their weighting of Japanese stocks.

The futures buying by foreigners was just some investors piggybacking on sure buying demand from pensions, said Tomohiro Okawa of UBS Securities Japan. Many haven’t made a move yet.