Some said capital worth 6 trillion yuan locked up by new share sales will return to the market and that there is still room for policymakers to introduce monetary loosening as the Consumer Price Index, a gauge for inflation, remains low.

They also argued that the policy-driven stock market is still intact, and that any market corrections that went beyond a tolerable level would prompt policymakers in Beijing to step in.

Jeremy Stevens, the Asia economist at Standard Bank of South Africa, said that while price levels are well beyond where economic fundamentals suggest they should be, Beijing's policy objectives form a critical anchor for the stock market's performance.

"We think that regulators would prefer the market to rise at a slower pace and will use a variety of administrative measures to this end," he wrote in a research note.

"However, at the same time, if economic reality attempts to assert itself, Beijing will be able to stall any sharp correction."