8 percent amid a broad sell-off and some retailers collecting cash for upcoming initial public offerings, brokers said.
Turnover was 1.9 billion rupees.
Brokers said there were some forced selling of credit backed portfolios.
In November 2010, the Securities Exchange Commission said it has extended a deadline to cut credit given by brokers to their clients by six months to June 2011, with half the credit to be cut down by March 2011.
"Market trading mainly driven by institutional buying into some selective stocks," Vajirapani Bandaranayeke of Bartleet Mallory Stockbrokers said.
John Keells Holdings closed at 282.60, down 3.00 rupees with over one million shares changing hands.
There was a crossing of a million shares 285.00 rupees.
Royal Ceramics closed at 154.60, down 0.40 cents. There were two crossings, one of 500,000 at 150.00 and another of 250,000 at 155.00 rupees.
The All Share Price Index closed at 7,445.90, down 1.80 percent (136.65 points) while the Milanka Price Index of more liquid stocks closed at 6,933.
36, down 1.18 percent (82.51 points), according to stock exchange provisional figures.
On Monday the market closed 1.07 percent lower.