Foreign investors had also been selling heavily in recent weeks.
"This is a good sign - that foreigners are looking at the market," he said. "Also the motor sector shot up because of the tax reduction."
The government said Tuesday it would slash import duties on motor vehicles and some consumer products like watches and cameras.
"Most banking stocks increased across the board today," said Nikita Tissera of SC Securities.
"We still believe that banking as a sector still trades at a discount despite the recent rise in prices given the high loan growth expectations."
Brokers said speculation that the government would reduce the high effective taxation of around 60 percent on banks also helped other banking share prices move up.
And there was continued interest in shares of motor and consumer goods firms which would benefit from lower import duties.
Kamaladasa also said the hotel sector might pick up again with large numbers of Indian tourists expected for an Indian film awards event being held in Colombo.
"Investors are expecting concessions from the (forthcoming) budget as well which could lift most stocks up," he said.
"And quarterly earnings are out. Those companies which have done well and have sound earnings will see steady growth."
Diesel & Motor Engineering rose again Wednesday on the back of the previous day's gains. The stock closed at 605.75 rupees, up 55 rupees or 10 percent.
Sathosa Motors, which had shot up 11 percent (15.50) on Tuesday, lost some of the previous day's gains, closing at 145 rupees, down 7.50 rupees (five percent).
Singer Industries (Ceylon) closed at 117.75, up 18 rupees (18 percent) and Singer Sri Lanka closed at 115, up 19.75 rupees (21 percent).
Sinhaputhra Finance, which began trading Wednesday, closed at 100 rupees, having opened at 105 and hitting a high of 140 rupees
There were also 11 "crossings" of John Keells Holdings totaling 7.8 million shares done between 185 and 187 rupees and a deal of 9.4 million shares of Kotmale Holdings at 28 rupees a share along with four crossing of three million NTB shares at 38-40 rupees. The All Share Price Index closed at 4,300.39, up almost one percent (41.59 points) while the more liquid Milanka index rose 1.50 percent (71.56 points) to close at 4,849.94.
Turnover was 9.6 billion rupees, according to stock exchange provisional figures.
The sale of a 9.8 percent stake of Commercial Bank of Ceylon by DFCC Bank to a foreign buyer for 5.8 billion rupees accounted for just over half the day's turnover.
The divestment reduced DFCC's shareholding in Commercial Bank to 18.67 percent with regulations limiting bank shareownership to a maximum of 15 percent.
"Today it was banking stocks which moved the market," said Vajirapani Bandaranayake of Bartleet Mallory Stockbrokers.
The Commercial Bank sale was done in three crossings or off-the-floor deals of a total of 23.58 million at 250 rupees a share.
Commercial Bank closed at 254.50 rupees, up 5.25 or two percent. DFCC Bank closed at 238.25 rupees, up 29.75 or 14 percent.