Sri Lanka piled up a huge 348 for one and then shot out the Indians for a paltry 187 in 44.5 overs.
India are now in a position, where they need to win the remaining two games to qualify for the final.
"It was a reality check for us, we have to analyse what we did wrong. We have two more games to go. This is going to hurt the guys a little bit," Kohli, leading the side in place of injured skipper Mahendra Singh Dhoni, said.
"It was a tough day at the office. We were not up to the mark with the ball. The Sri Lankans batted really well, and we did not. To chase down 349, you need a quick start, we were not able to do that, that did not give us momentum," he said.
India scored just 28 runs in the first 10 overs and lost opener Rohit Sharma.
Asked about the need for sending a pinch-hitter while chasing the total, Kohli said, "The way we have been batting, I don't think we needed to consider that option. It didn't happen today.