The stock market shook off its doldrums on Tuesday with the main index rising 1.23 percent, the biggest one-day rise in two months.[Offshore Company Incorporation]

The benchmark Shanghai Composite Index jumped 28.24 points, closing at 2,321.32, with trade volume of 120.4 billion yuan ($19.7 billion). Finance and property stocks gained the most among blue chips.

Analysts said the renewed market confidence was expected to continue the bounce, which started at the end of December.

"An increase in credit supply in March, exceeding 1 trillion yuan, coupled with an awakening in overseas demand, has boosted the market for the second time since the end of last year, and the current surge is certainly healthy enough to keep going until the next quarter," said Wang Jianhui, chief economist with Southwest Securities Co Ltd.[HongKong Richful  - Hong Kong Company Formation, Offshore Company Incorporation]

Wang expected the market to grow 15 to 20 percent for the year, as investor confidence continued to pick up, along with an appreciation of the yuan and improved market liquidity.

The China Securities Regulatory Commission has announced 25 policies since last year to ease controls on securities companies, particularly encouraging asset management services.

The State Council on May 16 published a list of items that no longer require central government approval, or have been delegated to lower-level authorities for clearance.

For instance, investment in large oil and gas fields, and airports, no longer need to go through a long administrative approval process.

A market report from brokerage company Nomura said that it would not be surprising to see the central government keeping local governments on a short financial leash, often allowing them to go two steps forward, before pulling them one step back.

A previous Nomura report also pointed out that since its Jan 30 peak, the MSCI-China Indexes - which consist of a range of country, composite and non-domestic indexes for the Chinese market - has corrected by 12 percent, and many individual stocks have corrected twice or more, compared with the benchmark average.

Analysts said they expected more short-time fluctuations in the markets in coming weeks.

"The overall trend will be[HK Corporate Registration] adjustments being made to maintain growth in the current economic conditions," said Cheng Dinghua, an analyst at Essence Securities.

Cheng added that he expected to see no clear signs of strong economic recovery until the third quarter, but that the market remains optimistic of relatively loose ongoing monetary policies.

Notably on Tuesday, however, the Growth Enterprise Index dropped sharply, closing down 2.82 percent to 1,059.

The performance of China's Nasdaq-like growth enterprise market has been unpredictable of late, leaving many analysts to view the index's component stocks with caution.