Dialog Telekom closed flat at eight rupees
Bartleet Mallory Stockbrokers said price losers significantly outdid price gainers by 118 to 11 in Tuesday's trading.
They said in their market report that selling pressure was seen among foreign investors with a net outflow of 84.
32 million rupees.
The Colombo stocks fell despite world markets showing further signs of recovery.
Most Asian and European stocks rose on hopes of another US economic stimulus package and a thaw in frozen credit markets.
Updated
The All Share Price Index slipped 2.26 percent (44.57 points) to end at 1,923.72 while the Milanka lost 2.46 percent (54.35 points) to close at 2,156.10. Turnover was 268 million rupees.
"The market fell mainly because high impact stocks like John Keells Holdings (JKH) came down," said Mohan Thangarajah of First Guardian Equities.
"Also, there are concerns about corporate earnings in the market."
JKH, the most actively traded stock and the second most active in terms of volumes, fell 3.94 percent or 2.75 rupees to 67 rupees.
Other stocks with a heavy weighting on the index also came down.
Sri Lanka Telecom lost 2.50 percent (one rupee) to end at 39 rupees and Distilleries plunged 8.
33 percent or five rupees to 55 rupees.