Nifty might be overbought but...

Just as a comparison between March/April and June/July, overbought can be misleading. For example, the whole of March/mid-april, market was overbought but Nifty made new highs. We have a similar situation now, but we have been overbought only for a few days now. Also note that RSI is not showing any negative divergence. So one has to be careful to go short in this market. FIIs have started selling stock futures just as in March but they are still buying in index futures. In April, FIIs went short in both index and stock futures. Then we started seeing the big negative divergences in daily charts. So until then, there is an equal chance for this market to go up as to go down.