The government raised fuel prices to record levels on Saturday to prevent the state-owned oil firm suffering further losses. Investors expect more pressure on already near-record high inflation.
The main share index ended 1.15 percent or 66.13 points weaker at 5,669.48, at its lowest since Dec. 31.
'Many investors were on the sidelines awaiting direction on interest rates,' said a stockbroker who declined to be identified.
Analysts said interest rates could reverse a falling trend as the government may seek expensive commercial foreign borrowing.
Turnover was 713.97 million rupees ($5.60 million), well below this year's daily average of 1.06 billion rupees.
Foreign investors bought a net 361 million rupees worth of shares, but they have been net sellers of 383.37 million rupees worth of rupees this year.
The rupee ended weaker at 127.47/50 to the dollar from Friday's close of 127.30/45, on importer dollar demand, dealers said. ($1 = 127.4000 Sri Lanka rupees)
(Reporting by Shihar Aneez and Ranga Sirilal)
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