The All-Share Price Index rose 1.75 percent to an all time high of 3,244.87 in intra-day trade, before closing up 1.43 percent or 45.46 points at 3,234.28, its highest ever close.

"Market is back on its feet and running," said Prasanna Chandrasekara Associate Director at Asia Securities stockbrokers in Colombo. "People are getting in to positions before the elections and ahead of new year."

Foreign purchase last week was 5.87 billion rupees, outpacing foreign sales worth 3.58 billion rupees. Net foreign inflows till Dec 18 stood at a record 1.15 billion rupees. At close on Monday, net foreign inflows stood at 855 million rupees, reported Reuters.

Market heavyweight John Keells Holdings JKH.CM closed 1.09 percent firmer at 162.25 rupees a share, while shares in conglomerate Aitken Spence SPEN.CM closed 10 percent firmer at 1,100 rupees a share.

The day's turnover was at 1.01 billion rupees ($8.83 million), mostly driven by local buying, well above last year's daily market average of 464 million rupees.

The country's economy grew 4.2 percent in the third quarter from a year earlier, helped by increased activity after the end of a 25-year war and up from a 2.1 percent expansion in the second quarter.

The Central Bank said it maintains flexible exchange rate policy.
"We are maintaining a flexible exchange rate policy," Central Bank governor Ajith Nivard Cabraal said to Reuters.