The main stock index closed 0.27 percent, or 15.62 points, weaker at 5,793.53, its lowest level since Oct. 1.
Sri Lankan President Mahinda Rajapaksa, who is also the finance minister, will unveil the 2014 budget on Thursday that is expected to include populist measures ahead of a possible election year as well as some tax hikes to enable the government to further trim its still-large fiscal deficit.
Stockbrokers said worries that companies could be subjected to possible tax hikes in the budget dented sentiment.
Shares in top fixed-line phone operator Sri Lanka Telecom fell 2.36 percent to 37.30 rupees, diversified conglomerate Carson Cumberbatch PLC lost 2.13 percent to 372 rupees, while Ceylon Tobacco Company PLC ended 0.89 percent weaker at 1,060.00 rupees.
The bourse has been sluggish due to concerns over a drop in September-quarter earnings. Many listed firms release their quarterly earnings this month.
The day's turnover was 486.4 million rupees ($3.71 million), lower than this year's daily average of around 855.4 million rupees.
Foreign investors were net sellers for the first time in the last five sessions, selling 74.6 million rupees of shares on Wednesday, but the country has seen 22.8 billion rupees of net foreign inflows year-to-date this year.
($1 = 131.1000 Sri Lanka rupees)
(Reporting by Shihar Aneez and Ranga Sirilal; Editing by Sunil Nair)
(Reuters Messaging: firstname.lastname@example.org)(twitter.com/shihara neez)