The All Share Price Index closed at 6,434.85, up 2.8 percent (177.84 points) while the Milanka index of liquid stocks rose 2.50 percent (170.37 points) to close at 6,988.54, according to Colombo Stock Exchange (CSE) provisional figures.
Turnover was 4.8 billion rupees. There were 202 gainers and 21 losers.
"A lot of interest was seen in the banking, manufacturing and hotels sectors," Rakshitha Perera of Bartleet Mallory Stockbrokers said.
"There was institutional, high-net-worth individual as well retail participation with stocks recovering across the border, he said.
Among banks Sampath Bank closed at 260.80, up 11.90 rupees, Commercial Bank closed at 267.50, up 4.30 and DFCC closed at 200.00, up 3.20 rupees.
Seylan Bank closed at 95.30, up 6.40 with 12 million shares being traded.
Banks were among the biggest gainers this year, on expectations that taxes would come down after the budget. Though taxes did come down, the savings are expected to be put in a special fund subject to government directed lending.
The Securities and Exchange Commission Monday said the December deadline to clear credit to clients has been extended to June 2011, with 50 percent of the credit to be cleared by March.
"We are encouraged by the September 2010 quarter performance and remain positive on the direction of the CSE. Only the CSE has been more â€˜credit dependentâ€™ than we would have liked to see," Nikita Tissera, S C Securities said.
John Keells Holdings closed at 298.80, up 6.20 with 1.1 million shares traded. (Ends)