Key index set for correction

THE Shanghai stock market is likely to correct this week and post a record daily decline as investors take profit, analysts said.

''The local benchmark index is expected to experience a V-shape movement this month and the index is likely to fall sharply in mid-month due to huge pressure from broad selling by investors to take profits,'' Essence Securities Co wrote in a research note. ''The resistance might be around 2,650 points.''

The Shanghai Composite Index gained an accumulative 5.98 percent last week, the sixth consecutive weekly gain, to close at 2,625.65 points, the highest since August 7.

The gains in surrounding markets, the central government's 20-billion-yuan (US$2.94 billion) fund to boost technology upgrading and Nanhui District's merger into the Pudong New Area pushed the index higher last week, analysts said.

But the recent gains may be offset by a new round of fluctuations in the market, said Teng Yin, an analyst at Everbright Securities Co.

''This will add to the risks of a market plunge as there is mounting pressure for a correction after continuous rallies,'' Teng cautioned.

UBS Investment Research said that it does not exclude the possibility of a big tumble this week in the face of technical pressures. The company forecast the index to move between 2,410 points and 2,680 points.