More than 20 of the 25 companies that were listed on the Science and Technology Innovation Board, saw sharp declines on the day, with some dropping more than 15%. Semiconductor firm Espressif Systems was among the few firms that bucked the overall trend, with its stock surging more than 14%.
"The Chinese equity market is prone to episodes ... of speculation," John Stopford, head of multi-asset income at Investec Asset Management, told CNBC's "Squawk Box" on Tuesday.
"You end up with lots of stocks that trade on pretty attractive valuations," he said noting that it could bring opportunities for investment.
The first day of trading on Monday saw volatile swings on the Star Market, with some shares climbing as high as 520%, and adding 305 billion yuan (about $44.3 billion) in market capitalization, according to Reuters.
"The first day serves as a good start as all the stocks are trading smoothly and liquidity is huge," Lynda Zhou, equities chief investment officer in China and portfolio manager at Fidelity International, wrote in a note.
"It will encourage good companies to choose STAR board," she said, adding that the board reached a turnover of $7.1 billion on the first day of trading.
While companies on others Chinese boards have a cap of 44% on debut, the new tech board does not set limits on share prices during the first five days of a firm's trading. After that, they will be subjected to a 20% trading range limit.
The Star Market is China's latest attempt to establish a new major equity market as it seeks to build its domestic financial system. The focus is on valuable industries with major growth potential, such as high-tech equipment manufacturing and biotechnology.
"It is very exciting, it is a very important development in terms of China's capital markets — to have a technology-focused board like this," Stefan Hofer, managing director and chief investment strategist at LGT Bank Asia, told CNBC's "Street Signs" on Tuesday.
As China develops in the coming years, such companies from the so-called new economy are going to be "the absolute star," Hofer said.
Furthermore, in the context of the ongoing trade fight between Washington and Beijing, many of these domestically-oriented companies offer "a bit of ... a relative safe-haven" in the case of China, he added.
"Yes we've had a bit of a bumpy start in terms of trading so far, but really in terms of the future growth prospects it's really about this sector more than anything else," Hofer said.
"After the first day's rally, most of the stocks are trading at elevated valuation, I expect the near term performance will be volatile and I am a bit cautious," said Fidelity's Zhou.
Zhou said she expects the participation of institutional investors to rise, but pointed out that it will be "very selective" due to high valuation and volatility.
"In the long run, I keep my positive view," Zhou said.
— Reuters and CNBC's Evelyn Cheng contributed to this report.