The S&P SL20 closed 18.72 points lower at 3,261.76, down 0.57 percent, peaking at an intraday high of 3,287.69.
Turnover amounted to 372.54 million rupees, down from 1,480.60 million rupees the previous day, with shares of 103 firms making losses against 92 gainers.
Foreigners were net sellers on Monday, with stocks worth 114.25 million rupees sold, up from 36.43 million rupees the previous day, and foreigners bought shares worth 22.58 million rupees, down from 47.70 million rupees the previous day.
JKH closed 4.20 rupees lower at 218.00 rupees and Carson Cumberbatch closed 19.90 rupees lower at 375.00 rupees.
Ceylinco Insurance closed 73.80 rupees lower at 1,276.10 rupees and Dialog closed 10 cents lower at 8.80 rupees.
Ceylon Investment closed 6.60 rupees lower at 80.20 rupees.
Sri Lanka Telecom closed 1.00 rupee higher at 39.80 rupees and Commercial Leasing and Finance closed 20 cents higher at 4.20 rupees.
PCH Holdings closed 20 cents lower at 1.50 rupees with more than 9.42 million shares changing hands and speculative trading continued in troubled Touchwood, closing 30 cents lower at 3.80 rupees with more than 2.39 million shares traded.
Troubled CIFL, closing 10 cents higher at 1.30 rupees, saw more than 4.95 million shares change hands.
Commercial Bank closed 40 cents lower at 116.50 rupees and featured in a single crossing and Sampath Bank closed 80 cents higher at 174.50 rupees. The Sri Lankan rupee closed weaker against the US dollar in the spot market at 130.95/131.00 from an opening position of 130.65/75, dealers said, with the Central Bank intervening to keep the rupee steady at 131.00 against the US dollar.
Excess liquidity in money markets are high after the the monetary authority bought dollars capital inflow, preventing the rupee from appreciating.
Excess liquidity in money markets come from unsterilized dollar purchases.
Analysts say the Central Bank should actively intervene until excess liquidity runs out (unsterilized forex sales) to keep the rupee stable.
Analysts have said the Central Bank's practice of buying capital inflows to generate liquidity and not following up with sales when the liquidity generates import demand is a key reason for the rupee's weakness despite having policy interest rates much higher than the US currency.