Golden buying opportunity for Japan stocks may be near

Investors looking to up their exposure to Japanese equities may be in luck, with the market approaching attractive levels, according to equity strategists.

The Nikkei 225, which is trading at a two-month low of just over 15,000, has tumbled 8 percent since the start of the year in tandem with the risk-off trade in global stock markets.

A combination of factors – from concerns over the looming consumption tax hike to a lack of structural reforms and a strengthening yen – has weighed on the country's equity market.

Toru Yamanaka | AFP | Getty Images

However, Nomura said the "first buying opportunity" of 2014 is near. The Japanese investment bank deems Nikkei at 14,500, which marks a further downside of more than 3 percent from current levels, a good entry point for investors.

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"We see no reason to change our stance on Japanese equities for the time being. Unless dollar-yen drops below 100 and the yen begins to appreciate again, we do not expect the underlying bull trend in Japanese equities to change," Hiromichi Tamura analyst at Nomura wrote in a note on Monday.

Recent concerns around emerging markets have prompted investors to seek shelter in the safe-haven Japanese currency.

The yen – which tends to be inversely correlated with the Nikkei – has appreciated almost 3 percent against the U.S. dollar since the beginning of the year. The dollar/yen pair hovered at 102.50 on Monday.

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Nomura expects the Nikkei to reach 18,000 by the end of the year, in what it describes as the greatest return of all global stocks in 2014.

"We think the driver of global equities in 2014 will be EPS growth rather than waning risk or higher stock valuations. We forecast earnings per share (EPS) growth of 19 percent for Japanese equities in 2014, the highest of all, followed by European equities at 14 percent," the bank said in a report earlier this month.

Rob Aspin, the head of Global Equity Investment Strategy at Standard Chartered Bank, said he is currently neutral on Japan stocks, but also sees 14,500 on the Nikkei as an attractive level to re-enter the market.

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"We're neutral the Japanese market at the moment, one needs to see the emerging markets story unfold further," Aspin said, noting that continued concerns over the outlook for emerging markets may fuel a further rise in the yen, which would be negative for Japanese stocks.

"Longer term, we remain positive. Expectations that the Bank of Japan will provide liquidity to offset the impact of the consumption tax should support the market," Aspin said.

The Bank of Japan is expected to provide additional monetary stimulus following the consumption tax hike in April in order to support the country's nascent recovery in private demand.

—By CNBC's Ansuya Harjani. Follow her on Twitter:@Ansuya_H