Chinese equities soared on Monday morning following the announcement of a stamp duty cut, but most of these gains were lost by the time the market closed, indicating that more substantial stimulus to shore up economic growth may still be integral for the rally to become sustained and full-blown, experts said.

The benchmark Shanghai Composite Index jumped 5.06 percent when the market opened on Monday as investors were cheered by a significant policy package delivered on Sunday to revitalize the capital market, including slashing the stamp duty levied on stock trading from 0.1 percent to 0.05 percent, starting from Monday.

Nevertheless, the index lost most of its early gains when the market closed, ending 1.13 percent higher at 3,098.64 points. The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, gained 6.96 percent at the market opening but closed only 0.96 percent higher at 2,060.04 points.

An index tracking securities firms, which led the morning rally, went up by 2.35 percent to close at 9,408.82 points, versus 10.75 percent at the market opening, according to market tracker Wind Info.

Charlie Zheng, chief economist at Samoyed Cloud Technology Group Holdings, said the market might have overreacted in the morning session to the announcement and triggered a sell-off later, with investors' expectations of future market movements diverging.

The A-share market may stabilize in the coming weeks as the pace of IPOs and refinancing slows while additional capital is ushered into the market, Zheng said.

The China Securities Regulatory Commission pledged on Sunday to temporarily slow the pace of IPOs, relax the margin financing requirement and implement more stringent regulation on major shareholder selling. This came after the commission encouraged mid- and long-term funds, such as those managed by pension managers and insurance companies, to beef up equity investments, on Thursday.

"But, to kick-start an upward market trend, merely relying on these policies aimed at supporting the market won't be enough," said Zheng, who urged more efforts to improve economic fundamentals, such as restoring the confidence of private enterprises and approving more central government debt to boost aggregate demand.

David Scutt, a market analyst at GAIN Capital, also cautioned that it's "debatable" whether the latest measures can lead to anything more than a short-term bounce if meaningful measures to spur activity in the real economy are not delivered.

On Monday, northbound trading of stock connects between mainland and Hong Kong exchanges saw a net 8.25 billion yuan ($1.13 billion) outflow of A shares, after Bloomberg reported on Friday that Morgan Stanley had cut its price targets of Chinese equities indexes due to earnings pressures.

Ming Ming, chief economist of CITIC Securities, said both China's economic fundamentals and the A-shares earnings cycle are in the process of bottoming out and will likely gradually improve, citing that more policies to stabilize the economy are in the offing, including those to address the real estate downturn and local government debt risks.

Chris Liu, a senior portfolio manager at Invesco, a global investment management company, said there could also be further policy support to the market if needed, such as extending trading hours and expanding mutual fund investment scope.

This is because the stamp duty cut — which could save investors annual trading costs of roughly 138 billion yuan — has signaled that the authorities are paying a great deal of attention to revitalizing investors' sentiment, Liu said.