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Some of the biggest stock market gains in the first quarter of 2014 can be found in the countries that were at the center of Europe's debt crisis as investors opt for bargain-hunting rather than parking cash in overheated markets.

During the sovereign debt crisis that ravaged the 18-country euro zone for nearly three years, investors ditched riskier countries like Spain, Italy and Portugal. But, thanks in part to European Central Bank chief Mario Draghi's promise to "whatever it takes" to preserve the euro and a sluggish return to growth, positive "buy" indicators have returned to the riskier countries in the second half of last year and it now looks certain that peripheral stock markets are back in vogue.

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"The euro zone periphery's tepid recovery warms the heart of bargain hunters a plenty," Joe Rundle, the head of trading at ETX Capital, told CNBC via email.

Italy's blue-chip stocks on the FTSE MIB Index had soared over 13 percent with just a few hours left till the end of the trading quarter. This has come amid a change of guard at the heart of government and some tough talk on cost-cutting that has even included state-owned cars being auctioned on eBay.

Portugal's PSI 20 has performed even better with a gain of 15 percent, while Spain's IBEX 35 has risen 4 percent. Even France, despite weak fundamentals and a government that's taking a beating at the ballot boxes, has edged higher by over 2.5 percent.

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It may seem like small beer but when contrasted against global majors, these indexes are putting together strong gains -- albeit from relatively low bases. Germany's DAX has risen just 0.4 percent with tensions in Ukraine weighed heavily on its blue-chips. The U.K.'s FTSE 100 - with its heavy exposure to China - has lost 2 percent with persistent fears that growth in the world's second largest economy is slowing at a rapid pace.

Even U.S. bourses - which last year rocketed to all-time highs with the help of the Federal Reserve's accommodative policies - are struggling to keep pace. Both the Dow Jones Industrial and Nasdaq 100 have gone in reverse whilst the has notched slims gains of just 0.5 percent.

"The dramatic improvement in sentiment towards the euro zone periphery is one of the most - if not the most - important market trends over the past year or so. In the realm of investor sentiment, the euro zone periphery has gone from being a no-go area to something of a perceived haven in the space of a couple of years," Nicholas Spiro, managing director at Spiro Sovereign Strategy told, CNBC via email.

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There are flickering signs of growth in the euro zone with surveys from both the manufacturing and services sectors showing expansion and gross domestic product beginning to post positive figures. But unemployment in the euro zone bloc still remains stubbornly high at 12 percent. Meanwhile, consumer prices have remained weak with a rise of just a 0.5 percent in March, according to a flash estimate on Monday. This has led some to warn of a deflationary spiral if the European Central Bank doesn't act to stimulate the economy.

The euro zone is now in a "fragile growth phase", according to Rundle, who believes investors have been looking are getting "ahead of" the peripheral's recovery.

"It's still high risk to put your eggs in one basket and gear your portfolio toward euro peripheral assets as downside risks remain, especially the issue of deflation in the region. Euro peripheral assets more likely to benefit are those with heavy global footprints outside of domestic economies – so carmakers, construction, energy, industrial and in some cases, banks but would caution that financials in the periphery remain risky bets," he said.

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Spiro, meanwhile, believes that it could be a risk too far, telling CNBC that markets are likely to once again become sensitive to the region's recovery. "It's only a question of time before this changes," Spiro said. "Sentiment and fundamentals have become far too detached from each other."