* Intel capital expenditure cut hits chip-related shares * Drugmakers fall on profit-taking * Obayashi gains after raising earnings outlook By Ayai Tomisawa TOKYO, April 15 (Reuters) - Japan's Nikkei share average was flat on Wednesday as investors took profits on recent gainers such as drugmakers, but expectations that companies will report strong profits supported sentiment.
Japanese shares have risen this year on expectations that profits will be pushed up by a weak yen and that consumption will be helped by a slump in oil prices and higher wages.
Last week the Nikkei 225 traded above the psychologically important 20,000 mark for the first time since April 2000.
But traders said that after the euphoria of reaching that milestone, investors had paused to assess the trading environment.
The Nikkei was flat at 19,908.46 in mid-morning after trading in negative territory earlier. It had ended flat on Tuesday.
"Investors expect higher stocks in the long run, so they don't want to sell," said Mitsushige Akino, chief fund manager at Ichiyoshi Asset Management. "But they also don't see catalysts which can justify a level above 20,000 now." Akino said that the Nikkei was likely to stay directionless for the time being.
"Analysts expect Japan Inc to post an average 15 percent rise in profits for the fiscal year through March 2016, but companies' tradition of announcing conservative outlooks should keep stocks down," he said.
Japanese companies will start reporting full-year earnings in May.
On Wednesday, drugmakers ran into profit-taking, with Shionogi & Co dropping 2.5 percent and Eisai Co shedding 1.1 percent after soaring 37 percent and 78 percent respectively this year.
Chip-related stocks took a hit after Intel said it would cut capital expenditure this year to $8.7 billion from $10 billion, a reduction that analysts said should improve free cash flow.
Tokyo Electron Ltd dropped 1.4 percent and Advantest Corp fell 1.0 percent.
Outperforming the market was contractor Obayashi Corp , which rose 2.5 percent after it raised its earnings outlook for the year to March 2015.
Data from China had little immediate impact. Its economy grew 7.0 percent in the first quarter - as expected, but still its slowest rate in six years.
The broader Topix was flat at 1,590.95 and the JPX-Nikkei Index 400 shed 0.1 percent to 14,430.46.
(Editing by Alan Raybould)