The main stock index rose 0.42 percent, or 27.23 points, to close at 6,488.85, its highest since 14 Oct, 2011.
The market shut early to mark a Buddhist religious holiday.
Both stocks and currency markets will remain closed on Friday.
Foreign investors were net buyers of shares worth of 218.8 million rupees, extending net foreign inflows this year to 13.1 billion rupees.
Shares in Ceylon Tobacco Company PLC rose 4.57 percent. Distillers Sri Lanka was up 1.94 percent.
The market's 14-day Relative Strength Index (RSI) was in overbought territory of 86.801 on Thursday and has been above the upper neutral level of 70 since April 16, Thomson Reuters data showed.
The stock index has gained 4.01 percent since the central bank cut key policy rates by 50 basis points on May 10, following some of its regional peers, to boost economic growth amid subdued demand.
The turnover was 556 million rupees ($4.40 million) on Thursday, less than this year's daily average of 1.05 billion rupees.
The rupee ended barely changed at 126.30/35 per dollar from Wednesday's close.
($1 = 126.4000 Sri Lanka rupees)
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sanjeev Miglani)
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