Srikanth, who had beaten Viktor twice early this year en route to his triumph at Swiss Open and India Open, could not produce his best and lost 13-21 18-21 in a 37-minute contest at the Hamdan Sports Complex.
The 22-year-old from Guntur will meet Chinese Taipei's Chou Tien Chen tomorrow in his final Group B match in the round-robin stage.
World No 6 Viktor moved into a 6-3 lead in the opening game but Srikanth kept breathing down his neck and played some exciting rallies by mixing his shots. The Indian clawed back to level the scores after catching his rival in the forecourt.
A few unforced errors and some sharp angled strokes helped Viktor to swell the lead to 16-11 after the interval. Srikanth tried to keep the shuttles in the corners but he couldn't control it properly as Dane led 20-13 and with the Indian finding the net he pocketed the opening game.
In the second game, Srikanth seemed little unsure of his strokes as his smashes went wide and Viktor too used his variation to dominate the proceedings. He once again opened up a 8-4 lead and entered the break with a six point advantage.
Srikanth then started playing better and came up with some steep smashes and low returns to trouble the Dane and narrowed the lead down to 15-19.
Viktor then played an amazing shot to move to match point. The Indian saved three match points but Viktor sealed the match with another cross court smash.
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