TOKYO: Japan’s Nikkei share average scaled to record highs for the second consecutive session on Monday, supported by upbeat performances in pharmaceuticals, although profit-taking limited the momentum in the market rally.

The Nikkei ended 0.35% higher at a new closing high of 39,233.71. The index eased from an all-time peak of 39,388.08 earlier in the session after the market resumed trade following a holiday on Friday.

The newest record comes after the index on Thursday breached levels last seen in 1989 during the halcyon days of the bubble economy.

The broader Topix finished 0.5% higher at 2,673.62.

Japanese stocks have surged on the back of cheap valuations and corporate reforms, which have succeeded in luring back foreign money looking for alternatives to battered Chinese markets. The index has gained 16.8% so far this year.

Japan’s Nikkei share average crosses all-time high, breaking 1989 record

With the decades-old record-high level broken, traders were also looking for the next milestone, with the 40,000-point mark emerging as a likely target level.

The Nikkei got a boost as the S&P 500 and Dow Jones Industrial Average, which are closely tracked by Japanese investors, ended at record highs on Friday.

The pharmaceutical sector outperformed, with the Topix sub-index up 2.5% on Monday.

Pharma giant Chugai Pharmaceutical rose 6.37% to lead the gains, while Daiichi Sankyo climbed 3.86%.

“There’s a sense that traders are picking out shares that are running behind and haven’t been bought as much,” said Hiroshi Namioka, chief strategist at T&D Asset Management.

Gains narrowed in the afternoon session as traders locked in profits after the recent rally, with 121 of the Nikkei’s 225 constituents advancing against 102 decliners.

Shares of technology-related companies, which helped lift the Nikkei on Thursday on the back of an upbeat revenue outlook by U.S. chipmaker Nvidia, retreated from recent highs.

Screen Holdings fell 3.49%, Lasertec Corp lost 2.15% while Tokyo Electron was down 1.59%.