* RSI suggests market vulnerable to profit-taking
* Foreigners embrace stable political and monetary policy outlook
* Kobe Steel soars as cost worries recede
By Ayai Tomisawa
TOKYO, Oct 17 (Reuters) - Japan’s Nikkei share average rose for an 11th straight day in choppy trade on Tuesday as a stable yen supported exporting automakers, while expectations that the ruling bloc will win the election later this month continued to underpin sentiment.
The Nikkei ended 0.4 percent higher at 21,336.12, the highest level since November 1996. The Nikkei dipped into negative territory briefly, but swung back to positive territory to extend its winning streak to 11 days, the longest stretch since May 2015.
“The Japanese market’s main buyers are seen to be foreign investors because the election outcome could lead to their favourite pattern,” said Masahiro Yamaguchi, a senior market analyst at SMBC Trust Bank. “Foreign investors become risk takers on Japan stocks when there is political stability and the hope that the current monetary policy will continue.”
A survey showed on Monday that Japanese Prime Minister Shinzo Abe’s ruling coalition is on track for a big win in Sunday’s general election.
But such an “election hope rally” is expected to run its course by the end of the week, with traders pointing to a technical sign that the market is overbought.
The recent gains have pushed the Nikkei into overbought territory on a technical basis, with its relative strength index (RSI) at 84, leaving it vulnerable to profit-taking. A level above 70 is considered to show that the market is overbought.
Kobe Steel Ltd, soared 3.1 percent as worries about costs stemming from a data falsification scandal receded. Kobe Steel’s shares plunged to near five-year lows in the wake of the scandal which raised fears of a heavy financial and legal fallout.
An analyst who attended a briefing given by Kobe Steel executives late on Monday said that the financial impact appears limited.
“Obviously, Kobe Steel cannot rule out the risk of future impact, but so far, so good, in our view,” Thanh Ha Pham, an analyst at Jefferies in Tokyo, wrote in a note after the briefing.
Other steelmakers also gained ground, with Nippon Steel & Sumitomo Metal Corp surging 2.1 percent and JFE Holdings soaring 1.7 percent.
Automakers were steady, with Toyota Motor Corp and Honda Motor Co both rising 0.8 percent, supported by a stable yen rate.
The broader Topix was up 0.2 percent at 1,723.37.
Editing by Sam Holmes