Gains by large-cap and blue chip stocks stabilized the stock market on Monday after the government rolled out an unprecedented series of measures to halt a dramatic slide that has raised fears of a crash.

But the sharp divergence between large-and small-cap stocks could be a troubling sign and may complicate the government's rescue efforts, analysts warned.

Led by financial, [Hong Kong company registration]energy and real estate shares, the benchmark Shanghai Composite Index rose 2.41 percent in volatile trading to close at 3,775.91 points.

The transaction value of exchange-traded funds that track the largest 50 stocks in Shanghai reached a record value of 24.9 billion yuan ($4.03 billion) as government-backed securities firms and fund managers poured cash into the market.

Futures contracts for the CSI 300, SSE 50 and CSI 500 indexes for July surged during afternoon trading, indicating improved market sentiment.

To curb speculative trading, the China Financial Futures Exchange limited on Monday the maximum daily turnover of stock index futures trading for the CSI 500 to 1,200 contracts per trading account.

While the rally of large stocks helped calm the panicky market's nerves, mid-and small-cap stocks as well as those listed on ChiNext, the country's startup board, continued to suffer heavy losses. The startup index fell 4.28 percent, and nearly 900 smaller stocks tumbled by the 10 percent drop limit.

"Whether the blue chips will calm the small caps, or the small caps will continue to unsettle the rest of the market, remains to be seen," Hong Hao, chief strategist at Bocom International Holdings, [Hong Kong Company Formation] wrote in a research note.

"Buying anything expensive outside the blue chips will be tantamount to throwing good public money after bad and it should not be celebrated."