The benchmark Colombo All Share Price Index (ASPI) closed up 1.
16 percent (27.90 points) to end at 2,422.92 Monday, while the Milanka index of liquid stocks gained 1.
10 percent (29.48 points) to close at 2,700.75, according to provisional stock exchange data.
Turnover was 312.8 million rupees.
On Monday there was a net foreign outflow worth 7.5 million rupees, with foreigners buying 46.
3 million and selling 53.8 million rupees worth of shares, brokers said.
"Overall the market sentiment had improved from last week," Angelo Ranasinghe, research manager at Bartleet Mallory Stockbrokers said.
"Of the 20 sectors listed at the Colombo Stock Exchange, 13 sectors recorded growth, while only four sectors were in the negative.
"
Brokers said the diversified sector gained 1.5 percent, while the telecom sector was up 1.45 percent.
Index heavy conglomerate JKH closed at 133.
00 rupees, up 3.00, while Distilleries Company of Sri Lanka, closed at 85.
00 rupees, down 1.00.
Sri Lanka Telecom closed at 46.50 rupees, up 1.00, while Sri Lanka's largest celco, Dialog Telekom, closed flat at 5.
25 rupees.
Commercial Bank of Ceylon closed at 134.75 rupees, up 2.00, while National Development Bank closed at 156.00 rupees, up 75 cents.
Brokers said there was some speculative trading on Hotel Developers and Lanka Cement shares.
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Lanka Cement closed at 29.75 rupees, up 1.75, while Hotel Developers closed at 40.
50 rupees, up 8.50.
Brokers said 1.37 million Hotel Reefcomber shares changed hands. Hotel Reefcomber closed at 1.50 rupees, up 10 cents.
Aitken Spence Hotels closed at 153.
75 rupees, up 4.25, while John Keells Hotels closed flat at 12.50 rupees.
Confifi Hotels closed at 113.25 rupees, up 3.25, while Miramar Beach Hotel closed at 50.00 rupees, up 3.25 on small trading volumes.
Royal Palms Beach Hotels closed at 51.00 rupees, up 3.00, while Riverina Hotel closed at 52.75 rupees, up 1.50 on slim volumes.