The S&P BSE Sensex fell 39 points on Friday, as exit polls failed to predict a clear winner in the Bihar assembly elections, for which counting will be held on 8 November.
The Sensex closed at 26,265 points, down 0.15%, while the 50-share Nifty almost ended flat at 7,954.
The five-phase Bihar election, which ended on 5 November, is being seen as a referendum for the BJP-led NDA government at the Centre headed by Prime Minister Narendra Modi.
"Markets think it will be hard for the Modi government to win Bihar elections. That, coupled with somewhat in-line results, are weighing," NDTV Profit quoted Aneesh Srivastava, â€Žchief investment officer at IDBI Federal Life Insurance Co., as saying.
While some exit poll surveys are predicting a win for the NDA, others are saying that the Mahagathbandan led by JD (U) could win by a slender margin due to the effective campaign by incumbent chief minister and JD(U) leader Nitish Kumar. Today's Chanakya has given the BJP-led NDA a clear majority of 155 seats and 85 to the Mahagathbandan (Grand Alliance).
"Interestingly, and in contrast, Today's Chanakya, which accurately forecast the 2014 national elections and the Delhi elections, is predicting a landslide win for the BJP-led alliance. The outcome, therefore, while leaning towards the Grand Alliance, is not clear cut, and the final results could sway in either direction," said Nomura.
The Nifty has lost over 300 points in the past nine sessions amid uncertainty over the outcome of Bihar polls, as a win for NDA government is considered to boost its reform process.
"A marginal win or loss for the BJP is unlikely to change its bargaining power in the upper house in a meaningful way. In fact, even if the BJP wins Bihar, it will still have to continue to build consensus on legislative reforms," said Sonal Varma of Nomura.
Key reforms bills like Land Acquisition bill and Goods and Services Tax (GST) Bill have stalled in Rajya Sabha, where the ruling BJP doesn't have a majority due to "obstructionist opposition", Moody's Analytics said in a recent note.
Meanwhile, Healthcare and Power were the major losers among the BSE sectoral indices today, while IT and Bankex were the top gainers.
On the commodity front, gold prices ended Rs 80 higher at Rs 26,330 per 10 grams on improved demand, while silver prices rose Rs 50 to close at Rs 35,800 per kg.