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Is the party back on in Chinese stocks?

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Chinese stocks were on fire on Monday after Beijing pulled out fresh stops to put a floor under slumping share prices over the weekend, however strategists continue to remain on edge about the outlook for the mainland market.

The Shanghai Composite rocketed 7.8 percent to 3,975 at the start of trade before paring gains over the course of the morning session. The benchmark index closed up around 2.4 percent.

"In our base case, we believe these measures may stabilize market sentiment in the near term, but we believe the effects may not be sustainable," JPMorgan wrote in a note. "Without de-leveraging the A-share markets and deepening capital market reforms in order to attract more funds (i.e., overseas money), a rebound could be short-lived," it said.

As Greek voters went to the polls in a pivotal referendum, China authorities were busy drawing up a fresh package of measures to restore investors' shaken confidence. Taking a "kitchen sink" approach, several steps were announced to shore up the market.

First, the People's Bank of China (PBoC) pledged to provide liquidity support to China Securities Finance Corporation (CSFC) – the sole provider of margin financing loan services to securities houses. Second, new share offerings were suspended in an effort to preserve liquidity. Third, 21 major Chinese brokerages committed to jointly invest 15 percent of their net assets, or no less than 120 billion yuan ($19 billion), to establish a market stabilization fund.

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Alongside these announcements, the China Central Huijin Investment, a unit of China's sovereign wealth fund, confirmed that it had bought exchange traded funds in the secondary market and would continue to do so.

The weekend's steps come on the heels of a slew of measures unveiled since the end of June to halt the frenzied selling, including aggressive monetary easing and relaxing rules on using borrowed money to speculate on stocks, which proved largely ineffective.

According to Fraser Howie, managing director at Newedge Singapore, China's latest efforts reek of panic and are unlikely to instill confidence in investors.

"What they should be doing is not getting involved in the first place," Howie said, referring to Chinese authorities. "They shouldn't have been talking the market up. Whenever you build up a bubble with so much leverage then you're going to have weeks like we've seen in the past couple of weeks and there's really nothing you can do about it."

Patrick Chovanec, managing director and chief strategist at Silvercrest Asset Management, mirrored this view.

"The Chinese government has really thrown the kitchen sink at trying to support the stock market which in my view is insupportable. The valuations that they are trying to support are not sustainable," Chovanec said.

To be sure, not all market watchers were pessimistic about effectiveness of the government's latest move to stabilize market sentiment. Tommy Xie Dongming, economist at OCBC Bank, regarded the latest measures as "game changing."

"The latest interventions from Chinese government may be controversial from market economy perspective," he said. "Nevertheless, given previous measures failed to break the vicious cycle, it is better for those crisis management measures to come out sooner than later. We think those measures jointly will turn the soft market sentiment around to avert a hard landing in China's equity market," he added.

China's stock market has tumbled almost 30 percent since hitting a seven-year peak of 5,166.35 on June 12, triggered by a host of factors including an unwinding of margin trading and concerns over lofty valuations. Despite the recent rout, the market - which is largely driven by domestic retails investors - remains in positive territory for the year, up 17 percent since January 1.