The S&P BSE Sensex fell sharply by 248 points on Thursday, declining to the levels not seen in more than a month, as investors remained nervous ahead of counting for the Bihar assembly elections on 8 November.

The Sensex closed at 26,304 points, down 0.94%, while the 50-share Nifty fell 85 points, or 1.05%, to end at 7,955.

"Failure to sustain above 8,100 has reinforced weakness across the board. Selling pressure was felt across sectors with deterioration of market breadth, which is a cause of concern. Traders are advised to be cautious and selective in their stock selection even though valuations may seem relatively attractive," said Amar Ambani, Head of Research, IIFL.

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. 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. The fairly reliable of all the exit polls - Today's Chanakya - has given the BJP-led NDA a clear majority of 155 seats and 85 to the Mahagathbandan (Grand Alliance).

"Market is falling in anxiety to the Bihar exit poll prediction today. Bihar has 16 Rajya Sabha seats of which only 5 seats will retire in 2016 and this will not having any material impact on ruling government's majority. This is unlikely to revamp the central governments capex of reforms going forward but only a sentimental impact in the near-term," Vinod Nair, Head-Fundamental Research, Geojit BNP Paribas Financial Services, told Business Standard.

The sell-off was also led by growing hints over interest rate hike by the US central bank, which is a major negative for emerging markets like India.

In her Congressional testimony, the US Federal Reserve chairperson Janet Yellen on Wednesday hinted at monetary tightening next month.

"Following the relatively hawkish October FOMC statement and yesterday's signals from Fed Chair Yellen and her two top lieutenants Fischer and Dudley reinforcing expectations of a December rate hike, the threshold for Fed lift-off seems rather low," said Nordea Markets in a note.

Renewed concerns over the US Fed rate hike in December have impacted global markets, with China's Shanghai Composite index and Hong Kong's Hang Seng falling by 0.25% and 0.7%, respectively.

All the BSE sectoral indices ended lower, with Realty, Healtcare, Bankex and IT as the top losers.

Reliance Capital (up 1.3%), NTPC (up 0.7%), Hero Motocorp (up 0.7%), ITC (up 0.4%) and Hindustan Unilever (up 0.2%) were the top gainers among the Sensex stocks, while DLF (down 5.1%), Tata Steel (down 4.2%), BHEL (down 3.3%), Bharti Airtel (down 2.8%) and SBI (down 2.1%) ended as biggest losers.

On the commodities front, gold prices fell to Rs 180 to Rs 26,250 per 10 gram on the back of firmer US dollar. Silver prices also dropped by Rs 320 to Rs 35,750 per kg.

Today's Chanakya