PROFIT taking will hover over Shanghai stocks when the benchmark index tries to conquer the 3,000 points level, analyst said.
Expectations of a policy boost and lower consumer prices will support the market to recover in the short term, said Mo Guangliang, an analyst of Orient Securities Co.
Premier Wen Jiabao recently said that the country's economy was developing in the expected direction and the government would step up efforts to maintain rapid and steady economic development.
However, the market will be still under pressure to decline on concerns record high oil prices and shrinking export volume may hurt corporate earnings, said Mo, who forecast the barometer will move between 2,500 and 2,900 points this week.
China's exports rose 17.6 percent to US$121.5 billion last month, a sharp decrease from May's 28.1 percent.
The Shanghai Composite Index, which tracks yuan-denominated A shares and hard currency B-shares, jumped 7 percent, or 186.74 points, to end at 2,856.63 last week.
''Smaller caps and shares such as Shanghai AJ Corp outperformed last week, boosting investor confidence,'' said Yi Xiaobin, an analyst with Galaxy Securities Co.
Shanghai AJ Corp surged by the daily cap of 10 percent for four straight days last week to 14.51 yuan (US$ 2.12) on news that Shougang Holding (Hong Kong) Ltd and Hong Kong tycoon Li Ka-shing will form a joint venture to buy 120 million shares in it.
Yi expects the index to go north as the market's bottom has been reached and forecast the gauge at between 2,700 and 3,000 this week.