* RSI suggests market vulnerable to profit-taking
* Foreigners embrace stable political and monetary policy outlook
* Kobe Steel soars more than 5 pct as cost worries recede
By Ayai Tomisawa
TOKYO, Oct 17 (Reuters) - Japan’s Nikkei share average was flat in choppy trade on Tuesday morning as falls in index-heavyweight SoftBank weighed on the market, while expectations that the ruling bloc will win the election later this month continued to underpin sentiment.
Index-heavyweight SoftBank Group Corp shed 1.2 percent on profit-taking after hitting a level on Monday that had not been seen since 2000. It contributed a hefty 15 negative points to the Nikkei.
The Nikkei opened 0.5 percent higher and was in positive territory most of the morning, but it was flat at 21,250.89 by late morning.
Trading was choppy, and if the Nikkei ends higher, it will extend its winning streak to 11 days, the longest 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 more than 5 percent on Tuesday 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 1.8 percent.
Automakers were steady, with Toyota Motor Corp and Honda Motor Co both rising 0.5 percent.
The broader Topix was flat at 1,718.70.