Sri Lankan President Mahinda Rajapaksa, who is also the finance minister, unveiled a 2014 budget that aims to help produce faster growth, a smaller budget deficit and a bigger stock exchange in Colombo.
Rajapaksa said he wanted to give companies in finance, insurance and manufacturing an incentive to obtain listings on the Colombo Stock Exchange.
The main stock index closed up 0.14 percent, or 8.32 points, at 5,801.85, recovering from its seven-week closing low hit on Wednesday.
Analysts and stockbrokers said they were awaiting clarifications on the budget proposals and it was too early to comment on them.
The stock market has been sluggish due to concerns over the budget and a drop in September-quarter earnings.
Shares in John Keells Holding rose 0.46 percent to 219.00 rupees, while fixed telephone operator Sri Lanka Telecom PLC rose 1.88 percent to 38 rupees.
The day's turnover was 948.3 million rupees ($7.23 million), lower than this year's daily average of around 855.9 million rupees.
Foreign investors were net sellers for a second straight session, selling 208.4 million rupees of shares, but the country has seen 22.59 billion rupees of net foreign inflows so far this year.
($1 = 131.1000 Sri Lanka rupees)
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)
(Reuters Messaging: firstname.lastname@example.org)(twitter.com/rangab a)