The All Share Price Index closed at 2,913.39, up 1.20 percent (34.43 points) while the Milanka Price Index of more liquid stocks closed at 3,326.08, up 1.31 percent (43.12 points).
Turnover was 1.8 billion rupees, according to provisional Colombo Stock Exchange statistics.
Angelo Ranasinghe of Bartleet Mallory Stock Brokers said the day's trading was mainly driven by the DFCC sale which accounted for the bulk of turnover.
"Raj Rajaratnam sold his stake in DFCC. Apart from that deal, activity is still low."
He said December was usually a quiet month for share trading with many investors on holiday.
The day's biggest deal was the sale of a big stake in DFCC Bank shares by the Galleon hedge fund.
"Galleon Diversified Fund completely existed from DFFC Bank shares today," said Tushan Wickremasinghe, managing director of Capital Trust Securities, the selling broker.
"Most of the other blue chip shares held by Galleon have been sold and for the shares that remain, there are buyers at market prices."
He said John Keells Holdings is not in the Galleon group portfolio.
Some 12.2 million shares of DFCC, or about a nine percent stake of the bank, were sold Monday in several big blocks at 135 rupees each, according to CSE data.
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DFCC ended at 139.50 rupees, up 1.50, having traded between 137.50 and 144 rupees.
The DFCC trades accounted for a turnover 1,650 million rupees.
The Galleon Diversified Fund was the fifth biggest shareholder in DFCC with 10,885,200 shares or a stake of 8.2 percent.
Galleon has been selling off its portfolio in Colombo as it seeks to raise funds with investors withdrawing their money from the fund following Rajaratnam's arrest and release on bail on insider dealing charges in New York.