Results showed that Rajapakse had received 2.8 million votes, or 51 percent of the 5.1 million votes counted so far. Some 10 million valid votes were cast in total on Thursday.
Ex-premier Wickremesinghe was trailing with 2.6 million ballots, or 48 percent of the votes counted so far.
"The market is likely to go down further … possibility of recovering midway on buying opportunities," observed Vajira Premawardhana, Head of Research LOLC Securities.
The stockmarket plunged by 1.9 percent on Thursday on news that minority Tamils in the North had boycotted the hotly contested race.
Analysts said a low Tamil turnout could help Rajapakse in the neck-and-neck contest with final results due Friday. The majority Sinhalese have been seen as marginally favouring the prime minister.
The key indices also dived, as investors booked profits from Wednesday's 5.5 percent gain, which saw the main index reach a record high.
The benchmark All Share Index lost 49.98 points Thursday to close at 2501.42.
Brokers expected the declines to continue across-the-board, led by bluechip stocks in the telecommunication, banking and diversified sectors.
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