Koichi Ogawa, Daiwa Asset Management's chief portfolio manager, said the market was in a "panic situation" and "not really moving on sense".
But he and other market participants said that by falling below 10,000 points, the Nikkei had more than reached a level at which a rebound might be expected.
Central bank action
The Bank of Japan (BOJ) injected 1 trillion yen ($9.8bn) into money markets on Tuesday - the 15th straight business day that the Japanese central bank has poured money into the short-term money market as part of efforts by the world's central banks to ensure a flow of cash vital to the financial system.
|Some believe stocks have fallen to the point where a rebound might be expected [AFP]
The BOJ has been working with other central banks in the industrialised world to keep the financial system stable and prod banks to lend to each other to thaw frozen money markets, but fund injections by central banks have so far been largely ineffective, and bets are growing that rate cuts may be needed to jump-start interbank lending.
Speculation that the Group of Seven rich nations would agree on a co-ordinated response - including rate cuts - to the financial turmoil reached fever pitch on Monday and helped Wall Street erase some of its biggest intraday losses on record.
The BOJ finishes a two-day policy review on Tuesday and may signal whether it sees a need for further major central bank action such as a co-ordinated rate cut.
Tuesday's losses in Asia tracked an overnight plunge in US stocks, with the Dow Jones industrial average falling 700 points at one stage before closing down 369.88 points, or 3.58 per cent, to 9,955.50 on Monday, the first time the Dow has closed below 10,000 since October 2004.
Broader US stock indicators also fell, with the Standard & Poor's 500 dropping 42.34 points, or 3.85 per cent, to 1,056.89, and the Nasdaq Composite Index shedding 84.43 points, or 4.34 per cent, to 1,862.96.
For the year to date, the Dow is down about 25 per cent, the S&P 500 is down 28 per cent and the Nasdaq is down 29.8 per cent.
John Haynes, a strategist at Rensburg Sheppard Investment Management, said "people have decided that markets have no ability to repair themselves ... the buyers have stepped away, and the sellers are still there".
Al Jazeera's John Terrett, reporting from New York, explained that there were fears that Washington's $700bn bailout package approved last week may not be enough to stop the financial bleeding.
Our correspondent reported that the Libor, the rate at which banks lend money to each other, went up on Monday, which was not expected to happen after the bailout plan was approved.
George Bush, the US president, said it would take time for the financial rescue plan to be put into place and confidence to return to financial markets.
But he said on Monday that he believed "this plan will work over time".
The US treasury department on Monday named a former Goldman Sachs executive to oversee spending of the $700bn to buy up bad debts from troubled institutions and pledged to work with other countries to calm global financial markets.
The US administration announced that it had chosen Neel Kashkari, an assistant treasury secretary for international affairs, to head the treasury's new Office of Financial Stability on an interim basis.
Kashkari, 35, helped draft the bailout legislation as a close adviser of Henry Paulson, the treasury secretary.
European markets also dived steeply on Monday after a meeting of leaders yielded no unified strategy to tackle the crisis, leaving individual governments to attempt calming markets on their own.
But those efforts seem to have done little for investors' nerves as they fled to government bonds, gold and the low-yielding yen.
Amid the turbulence, the euro fell heavily against the dollar while oil prices dropped below $90 a barrel on Monday, their lowest level in eight months.