A schizophrenic Campbell man has pleaded not guilty to robbing a supermarket at knife point, but remains in custody as police continue their investigation.

Magistrate David Mossop this afternoon refused to grant Renny Goonerage bail after police raised fears the 31-year-old would interfere with evidence.

The ACT Magistrates Court heard investigators are still looking for the knife and jumper they believe Goonerage used in the commission of the crime.

But the defendant, through his legal aid lawyer Jacob Robertson, pleaded not guilty to the charge of aggravated robbery.

Police allege Goonerage robbed an IGA supermarket in Palmerston yesterday afternoon armed with a 25-cm kitchen knife.

A small sum of cash was taken during the robbery.

A police witness told the court the offender, captured on CCTV footage, "came very close to stabbing or injuring the victim".

And the court heard Goonerage was arrested last night in possession of clothing "strikingly similar" to the outfit worn by the man on the footage.

But investigators have yet to execute search warrants on Goonerage's car or residence, and are concerned he might dispose of evidence.

The officer told the court police had spotted a balaclava in the car similar to the one worn by the offender in the footage, but Mr Robertson pointed out the police statement of facts referred to the item in the car as a "beanie".

Goonerage has previously been diagnosed as suffering from schizophrenia, and a medical practitioner who assessed the man in the Watch House last night suggested he was in an episode of mania.

The court heard he has a history of drug-induced psychosis and has been on psychiatric treatment orders in the past.

Mr Robertson described the police concerns about interfering with evidence as mere speculation, and said his client was prepared to abide by strict bail conditions.

But Mr Mossop denied bail, although he said had the investigations been completed he would have been inclined to release Goonerage on conditions.

The matter is due back in court for a case management hearing later this month.