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Is the rally in global miners too good to be true?

John W Banagan | Photographer's Choice | Getty Images

Even as global resource stocks have had a stellar run-up in the recent weeks, driven by signs of stabilization in China's economy, cheap valuations and short covering, questions are building over the sustainability of this trend.

Shares of large-cap mining companies such as Australia-listed BHP Billiton and Rio Tinto and U.K.-listed Vedanta have rallied between 11 percent and 14 percent since mid-July.

(Read more: No 'Armageddon' for miners: Western Australia Premier)

"There has been a lot of trading money coming into the space by longer-term investors who have wanted to buy the mining space, but haven't had the clarity because of China, falling commodity prices," Chris Weston, senior investment strategist at IG Markets told CNBC.

"But the easy money has been made. The question now is how much more upside do we think there's going to be," he said.

(Read more: Gold miners insist they are not in 'dire straits')

According to Weston, further gains are likely in the near term given improving sentiment around the global economy. But beyond that, he says the outlook for mining stocks remains unclear, pointing to the risk of a selloff in commodities once the U.S. Federal Reserve begins to taper monetary stimulus and potential oversupply in resources such as iron ore in 2014.

Nicholas Ferres, investment director of global asset allocation at Eastspring Investments, doesn't believe this is the start of a multi-quarter uptrend in mining equities and recommends investors sell amid rallies.

"In the medium term, looming supply and weaker secular demand could be quite bearish for the sector. While this has been well documented over the past few months, it is not clear to me that it is priced into the valuation of all mining related assets," Ferres said.

"This is not a multi-quarter rally or a new bull market," he added.

(Read more: Why tapering could take iron ore to record highs)

Iron ore at $140 per metric ton and current levels in commodity currencies such as the Australian dollar are inconsistent with the prospect for weaker supply-demand fundamentals in the commodities space, he added.

Ferres thinks the Aussie dollar, which is down 12 percent against the U.S. dollar so far this year, is still too strong relative to the health of the mining sector. The currency staged a turnaround in the recent weeks, rising around 2 percent versus the greenback since the beginning of August, driven by positive economic data out of China - the country's top trading partner.

While improved economic indicators out of the world's second largest economy have helped lift commodity prices and mining equities, Ferres has doubts over whether demand out of the mainland will improve substantially.

(Read more: 'Indiscriminate sell-off' in miners creates 'bargains')

"If the new Chinese leadership is committed to structural reform, this implies that industrial demand for commodities is likely to be considerably lower than in the recent phase of China's development," he said.

—By CNBC's Ansuya Harjani; Follow her on Twitter @Ansuya_H