Forty suspects, including the driver of a van allegedly used by the suicide bombers, have been arrested so far.
Sri Lanka's worst terror attack targeting churches and luxury hotels that killed 321 people on Easter Sunday was claimed by the Islamic State even as a senior minister informed Parliament on Tuesday that initial probe suggested local Islamist extremists carried out the devastating blasts in retaliation for the shootings in New Zealand mosques.
Forty suspects, including the driver of a van allegedly used by the suicide bombers, have been arrested so far in connection with the attacks that shocked Sri Lankans who observed a day of national mourning on Tuesday.
National flags were lowered to half mast and people bowed their heads as a three-minute silence began at 8:30 am local time, the time the first of the attacks occurred on Sunday.
In a statement issued through its propaganda 'Amaq' news agency, the IS claimed that "the executors of the attack that targeted citizens of coalition states and Christians in Sri Lanka two days ago were with the group," according to the Site Intelligence Group, which monitors jihadist activities.
Sri Lanka has said little-known local Islamic extremist group called National Tawheed Jamath was behind the attacks and it was investigating whether they had international support as the toll rose to 321 on Tuesday. Ten Indians were among 38 foreigners killed in the attacks.
Addressing an emergency session of Parliament on Tuesday, State Minister of Defence Ruwan Wijewardene said the "preliminary investigations have revealed that what happened in Sri Lanka was in retaliation for the attack against Muslims in Christchurch".
WATCH: Suspected suicide bomber (carrying a backpack) walking into St Sebastian church on Easter Sunday
Five Indians were among 50 people killed in the terror attacks on two mosques in Christchurch, which was carried out by 28-year-old Australia-born Brenton Tarrant during Friday prayers on March 15.
According to an intelligence memo sent to some government officials before the attack, a member of the NIJ had posted "extremist content" on social media after the Christchurch shootings were carried out by a right-wing extremist, Wijewardene said.
All the suicide bombers were Sri Lankan citizens.
Authorities have placed all police stations in Colombo on high alert as police were hunting for an unidentified container truck and a van believed to be carrying explosives.
Lankan Prime Minister Ranil Wickremesinghe described the Easter attacks as "global terrorism reaching Sri Lanka".
In his address to Parliament, Wickremesinghe said that the attacks were of a different nature than the political objectives of the terrorist campaign which Sri Lanka faced until 2009 when the three-decade long conflict ended with the defeat of the Liberation Tigers of Tamil Eelam.
"Muslim community is against these attacks. There are only a few who are involved in these attacks," he said, adding that the international community has expressed solidarity with Sri Lanka over the blasts.
The group which carried out the attacks was trained for the planned attacks, he said, adding that the government will deal with the situation.
Leader of the Opposition Mahinda Rajapaksa blamed the government for failing to ensure national security.
"When I handed over the government it was free of terrorism. No such attack would have happened under my government," he said.
Rajapaksa said the government must step down if public security cannot be guaranteed.
Meanwhile, police arrested 16 more suspects during the past 24 hours, taking the total number of arrested people to 40, police spokesman Ruwan Gunasekera said.
"26 of them are with the CID, three are being held by the Terrorism Investigation Division. Nine of them have been already remanded and two are being held at a Colombo south police station," Gunasekera said.
A mass funeral was held Tuesday at the St Sebastian's Church in Negombo, which bore the brunt of the powerful blasts. As many as 100 worshippers were killed at the St Sebastian's Church.
The funeral comes amid a state of emergency declared in a gazette notification issued by President's Secretary Udaya Senaviratne upon the directives of president Maithripala Sirisena.
According to the gazette, the president had taken the measures in the interest of public security, to preserve public order and maintain supplies and essential services to the life of the people.
For the first time since the attack, the traffic returned to roads in Colombo where security had been heightened.
Sri Lanka's tourism industry, which accounts for around five per cent of Sri Lanka's GDP, is likely to suffer due to the Easter blasts.
The tourism officials said that many tourists were cutting short their holidays and the airlines have suffered flight cancellations.
The government said they had taken some damage control measures as the arrivals are expected to decline at least during the next 3 months.
"The government has taken every possible measure to ensure the safety of the public and all tourists who are in the country at present," said Tourism Minister John Amaratunga.
India is the largest source market for Sri Lanka, which received 2.3 million tourists from around the world in 2018.
Around 450,000 Indians visited Sri Lanka last year and the island nation was expecting the total Indian tourist arrivals to cross one million mark in 2019.
Tourism revenues in Lanka increased to $362.7 million in November from $284 million in October 2018, according to reports.
Even during the height of the three-decade long conflict with the LTTE, Sri Lanka had not seen tourists being targeted. The Easter blasts were the first time that tourists were specifically targeted.