Recent volatility in the A-share market is normal and upward momentum in the market is quite solid amid the regulators' continued efforts to bolster liquidity and improve listed companies' quality, insiders said.

The benchmark Shanghai Composite Index, which has been hovering around the 3,100-point level since the beginning of April, dipped 0.29 percent on Friday to close at 3065.26 points. The Shenzhen Component Index fell 1.04 percent while the technology-focused ChiNext, also in Shenzhen, closed 1.76 percent lower.

Photovoltaic companies, education service providers and semiconductor makers contributed the most to the Friday declines.

A-share heavyweights, which have a bearing on the indexes, attracted greater attention as investors await firmer signs of a bull run. Investors tracked banking, one of the heavyweight sectors, as Fitch Ratings on Tuesday downgraded the outlook for the credit rating of six Chinese banks to negative from stable. The six included China's "Big Four" — Bank of China, Agricultural Bank of China, China Construction Bank and Industrial and Commercial Bank of China.

Although investors did not spare listed commercial banks on Friday, causing an average 0.27 percent decline, the banks' overall appeal should not be overlooked, market mavens said.

The latest trading week starting April 15 saw banking A-shares attract over 13 billion yuan ($1.8 billion) in capital inflows, reporting four consecutive days of net capital inflows from Monday.

Overseas investors have also shown much interest in them. Of the 22 billion yuan invested by overseas investors in the A-share market via the stock connect program linking the Shanghai, Shenzhen and Hong Kong exchanges, 3.1 billion yuan went to listed banks.

Investors may pump in more money into banking stocks, said Xiao Feifei, analyst at CITIC Securities. Although banks listed in the A-share market may have seen their first-quarter business performance touch what could prove to be the year's low, a turnaround may be expected in the second half, she said.

Investors can choose large commercial banks as an optimal defense, given that they usually entail lower risks and provide more generous dividends. As China's economic recovery moves forward, valuation of commercial banks will likely increase significantly, she said.

On Oct 11, Central Huijin Investment, an arm of China's sovereign wealth fund, announced it will increase its "Big Four" shares in the secondary market for six months.

According to the subsequent announcements released by the four banks, Central Huijin had purchased nearly 1.1 billion shares of them. This drove up banks' share prices. BOC shares surged 20 percent, while ABC soared more than 18 percent. The other two saw their share prices rise more than 13 percent over the past six months.

Central Huijin is injecting liquidity into the market in a broader sense, insiders said. According to asset managers' first-quarter reports, Central Huijin has spent about 145 billion yuan in purchasing three broad-based exchange traded funds, which invest more extensively in the market.

The new guideline released by the State Council in early April aims to further advance the high-quality development of the Chinese capital market and strengthen risk prevention. This will make a big difference to the market, said Zhang Xia, chief strategist at China Merchants Securities.

Different from the previous measures that focused on the capital market's financing function, the new guideline lays more emphasis on the investment purpose of the capital market. In this sense, the A-share market's capital supply is likely to be further improved. As the new guideline underlines listed companies' dividend payments and share buybacks, institutions are expected to bring in more mid — to long-term capital into the market, Zhang said.

Banks will benefit from the introduction of more long-term capital as their distribution channels for wealth management products have further expanded, boosting their investment returns, said Zeng Gang, director of the Shanghai Institute for Finance & Development.