With the stock prices of domestic airlines reaching multi-year highs, there are growing doubts over the continuation of the rally due to overstretched gains.

Share prices of Jet Airways and SpiceJet ended at five-year and seven-year highs, respectively, on the Bombay Stock Exchange (BSE) on Friday, after the state-owned oil companies announced a further cut in prices of jet fuels. Following the cut, jet fuel price stood at Rs 39,892 a kilolitre in Delhi, reaching its lowest since June 2010.

Overall fuel prices have declined by 24% in the past one year, giving significant cost savings for the domestic carriers. 2015 turned out to be positive year for airlines, with their stocks prices witnessing a massive rally, Business Standard reported.

While SpiceJet shares went up a whopping over 300% last year, Jet Airways shares rose 82%. Both the companies benefited from a slump in global crude oil prices besides an increase in passenger traffic.

Given the huge gains, some analysts see the rally as overstretched and expect it to reverse in the coming weeks.

Market expert SP Tulsian said that the rally in the aviation stocks shares is "overdone" and most of them are nearing "the danger zone".

"We must wait for Q3 numbers for aviation firms and then take a call about what profitability can be expected going forward," SP Tulsian told CNBC-TV18.

But Hadrien Mendonca, analyst at IIFL, expects further rally in Jet Airways shares to Rs 805 in the next 9-12 months.

"The stock has been grinding in a broad-based trading range for the past five year. Similarly, it has been in a lower top cycle for over a decade now. Interestingly, as seen on the weekly charts, every time Jet Airways made a lower high, the immediate low would be a higher low than its previous one, indicating that the stock had began creating a base," said IIFL in a note.