Tissera said the large transactions in Distilleries Company accounted for the bulk of the day's trading volumes.
Over 11.2 million shares of Distilleries were traded mostly at 53 rupees adding 589 million rupees to the day's turnover.
The stock ended at 55 rupees, up 3.77 percent or two rupees.
Brokers said investors, especially foreigners, may be using the market upturn to get out of the stock, which has been dogged by concerns that the supreme court might overturn the privatization of a state insurance company which is now part of the Distilleries group.
The privatization has been challenged in court and a ruling is imminent,
High foreign selling was seen Thursday when the market ended a long slide and went up.
Bartleet Mallory Stockbrokers said Thursday's net foreign outflow was 108 million rupees.
The All Share Price Index rose 0.86 percent (14.06 points) to end at 1,639.94 while the more liquid Milanka gained 0.
64 percent (11.78 points) to end at 1,842.53. Turnover was 642 million rupees.
Nikita Tissera of SC Securities said the sentiments of some investors appeared have improved following recent battlefield gains by the army against the Tamil Tiger rebels.
However, he said, this appeared to be outweighed by nagging concerns over poor company earnings in the September quarter and high interest rates and inflation that could erode future corporate profitability.
The army has advanced deep into rebel-held territory in recent months and the fall of the guerrilla's northern Kilinochchi stronghold is said to be imminent.
A speech Thursday by Tiger leader Velupillai Prabhakaran was being interpreted as a readiness to end the war and may have also influenced investor sentiment.
However, analysts said the rebel leader had not given up his goal of carving out a separate state in the island's north and east. .