Shanghai stocks may rise following last Friday's rebound, but cautious market sentiment should prevent any sharp gains, analysts said.
Boosted by oil refiners and airlines after international crude oil prices plunged, and the strength in financial stocks in the last trading hour, the Shanghai Composite Index bounced back 3.49 percent to 2,778.37 last Friday, narrowing last week's loss to 2.74 percent.
China Galaxy Securities analyst Yi Xiaobin said the market was expected to further the rebound in the short term as a bottom may have been formed.
China on Thursday reported inflation fell to 7.1 percent in June, helping easing pressure on the government to raise interest rates. The economy grew by 10.1 percent in the second quarter, down from 10.6 percent in the first quarter, in line with state's effort to prevent runaway growth and higher inflation.
"But the Friday rebound means a short-term correction may be over, and the market could rise further," Yi said in a note.
Others say the rebound may be short-lived as investors remain concerned about inflationary pressure and slowing economic growth.
"We should not expect the index could rebound to somewhere very high. Investors are very cautious now so the index may still fall to find a floor," according to Zhou Yu at Pacific Securities.
