The All Share Price Index closed up 2.
13 percent (63.75 points) to end at 3,056.62, while the Milaka Index of more liquid stocks gained 2.
02 percent (68.13 points) to close at 3,434.00, according to provisional stock exchange data.
Turnover was 398.3 million rupees.
"The market is slowly recovering and investor sentiment is also improving but turnover levels still remain low," Waruna Singappulli, head of research at NDB Stockbrokers said.
"We can expect investor sentiment to further strengthen in the coming days which will help turnover levels to hit levels seen during the last few weeks.
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Sri Lanka's bourse took a beating this week after Sri Lankan-born billionaire fund manager; Raja Rajaratnam was arrested by US regulators for alleged insider dealing.
Rajaratnam was a big investor in the Colombo bourse with large stakes in blue chips such as Commercial Bank, DFCC Bank and National Development Bank, through his Galleon Fund.
He also has supposedly bought a big stake in conglomerate John Keells Holdings (JKH) with his personal funds, brokers said.
JKH, whose share price was pummeled earlier in the week on news of Rajaratnam's arrest, closed at 144.50 rupees, up 4.25.
National Development Bank closed at 189.
00 rupees, up 3.50, and DFCC Bank closed at 153.00 rupees, up 4.25.
Commercial Bank of Ceylon closed at 184.50 rupees, up 6.00, and Sampath Bank closed at 185.
00 rupees, up 2.75.
Dialog Telekom a unit of Telekom Malaysia closed flat at 7.
25 rupees with almost 1.5 million shares changing hands, and Sri Lanka Telecom closed at 46.00 rupees, up 2.00.
Distilleries Company of Sri Lankan closed at 101.00 rupees, up 2.50.