19 percent Monday as investor sentiment was buoyed by more military gains against Tamil Tiger rebels with the fall of a guerrilla stronghold and selective buying by funds.
Investments funds and high-net-worth individual investors also appeared to be slowly returning to the market after staying away owing to uncertainty and high interest rates which made money market instruments more attractive.
"Funds have also started to move in a little bit," said Jayaram.
"Slowly funds are moving in on selected stocks.
There's also a little bit of interest from high-net-worth individuals."
But worries about corporate earnings might depress the market as the last quarter was particularly difficult and the global and domestic economic outlook was negative, brokers said.
The All Share Price Index rose 56.25 points to end at 1,818.06 while the more liquid Milanka went up 4.
83 percent (93.20 points) to close at 2,022.95.
Turnover was 279 million rupees.
Brokers said there was continuing strong buying into Seylan Bank.
The bank's controlling shareholder, the Ceylinco group, is seen desperate to sell its stake to raise funds to pay off depositors in a credit card subsidiary which collapsed, although the asking price is said to be too high.
Yadhavan Jayaram of Bartleet Mallory Stockbrokers said sentiment among investors appeared to have improved with Sunday's fall of Mullaithivu, a key Tiger held town on the north-east coast.
The loss of the town means the Tigers no longer control any towns of significant and have got cornered in the north-east corner of the island with the army saying it is confident of finishing off the rebels soon.
"Also, there was some movement on plantations stocks," said Jayaram. "Investors expect tea prices to be higher at Tuesday's auction, especially low growns.
"