The BSE Sensex closed the day 17,173 points, down 189 points from its previous close, while the NSE dropped to 5222 points, down 58 points.
Reports that the SP could form a government on its own disappointed the markets, as it was believed that Congress support in Uttar Pradesh would in turn ensure SP support at the centre, to push through key reforms.
Poor performance by the Congress in Uttar Pradesh, Punjab and Goa, would now put increasing pressure on the Manmohan Singh government at the centre.
Among today's gainers were DLF, Siemens, Axis Bank and ITC.
Markets are now expected to take cues from the election results at least for tomorrow, while awaiting key policy decisions, including the Credit Policy and the Union Budget