The CSE All-Share Index fell 1.44% to 7,111.45. Its worst one-day fall since April 27.
Sri Lanka reported 1,923 new COVID-19 cases on Monday, a record increase, while overall deaths have crossed 700 so far, according to a Johns Hopkins University tally.
The CSE All-Share Index fell about 2.29% to close at 7,066.70 points.
Insurance underwriter Ceylinco Insurance Plc and conglomerate Expolanka Holdings Plc were the top drags to the index, falling about 9% and 3.9%, respectively.
The CSE All-Share Index ended down 0.18% at 7,115.12.
Diversified holding company Expolanka Holdings Plc and cigarette maker Ceylon Tobacco Company Plc were the top drags on the index, shedding 1.3% and 0.5%, respectively.
The CSE All Share Index closed 1.06% lower at 7,044.56.
In economic news, Sri Lanka's gross domestic product (GDP) grew 1.3% year-on-year in the fourth quarter of 2020, the statistics department said late on Tuesday.