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Australia chased down Lanka's total of 157/6 with seven wickets in hand.
The result moved Arsenal to 28 points from 11 games, two ahead of second-placed Manchester City, while Southampton are 15th with 12 points from 12 games.
It was Australia's biggest loss in a T20 International and New Zealand's first win in any format against their neighbours in Australia since a Test win in Hobart 11 years ago.
Lakshya Sen advanaced to the quarterfinals with a 21-9, 21-18 win over compatriot H S Prannoy.
The versatile Green is equally at ease batting in the top and middle order and is more than handy with his medium pace.
Rain had played spoilsport in the day's first practice match between Pakistan and Afghanistan at the same venue.
The 29-year-old becomes Australia's 27th ODI skipper and the first fast bowler to hold the position after impressing in his first year as Test captain.
Australia needed 16 runs off the last two overs to successfully chase down the total.
The championship starts without any clear favourites.
Former champions Sri Lanka take on Namibia in the first qualifier on Sunday (9.30 am IST), while the UAE clash with the Netherlands in the second match (1.30 pm IST).