Mr Dunlop also denies a charge of attempted grievous bodily harm.
He further denies disposing of two knives believed to have been used in the attack.
Mr Kelly died at Grafton Street in Derry’s Rosemount district in the early hours of March 4, 2018 after an altercation during which he was stabbed several times.
The trial heard evidence yesterday from police officers who were at the scene in Grafton Street immediately after the incident.
One officer told the jury of 8 men and 4 women that he had taken up a position outside 8, Grafton Street in the early hours of March 4, 2018.
He said there was a large group of people in the street and inside the house he saw two males he now knows to be Sean and Gary Anderson.
The officer said the two males exited the house and asked police why they were there and were told a man had been stabbed in the street.
The court was told by the witness that Sean Anderson then remarked to his brother, ‘At least it was me and not you.’
Under cross-examination by Brian McCartney QC, for Sean Anderson, the officer agreed that people in the street had been behaving in ‘a threatening and aggressive way.’
Another police officer said that, as the Anderson brothers emerged from the house, he noticed what he took to be blood on Gary Anderson’shoe.
The witness said that, when cautioned that he was being arrested on suspicion of murder, Gary Anderson replied: ‘Murder?’
Another police constable told the court that, at around 5.20am while she was on duty inside the Anderson house, a male arrived at the back door. This person, she said, was bleeding heavily from a cut on his hand.
The trial continues.