MUMBAI (Reuters) - The BSE Sensex and Nifty fell to five-week lows, tracking skittish Asian markets after U.S. Federal Reserve Governor Janet Yellen reiterated the possibility of raising interest rates for the first time in almost a decade in December.
Yellen on Wednesday pointed to a possible December interest rate "liftoff" but said rates would rise only slowly from then on.
Sentiment was also cautious ahead of the results from Bihar state's assembly elections. A victory in the state is seen as critical to Prime Minister Narendra Modi's plans to improve his party's strength in the upper house of parliament and raise optimism about passage of his reform agenda.
Exit polls are due later on Thursday and results will be out on Sunday.
"While Bihar polls will not impact national politics ... they will influence the market's perception of reforms," analysts at Bank of America Merrill Lynch wrote in a research report.
The BSE Sensex was down 0.28 percent after hitting an intraday low of 26,373.48, its lowest level since Oct. 1.
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The Nifty was trading 0.34 percent lower after hitting 7,981.90 its lowest since Oct. 1.
Financial stocks and pharmaceutical stocks, which have a greater proportion of foreign shareholding, led the declines on the NSE index.
Shares in Sun Pharma fell 3 percent after its U.S.-listed subsidiary Taro Pharma posted disappointed earnings.
Disappointing earnings from Ashok Leyland late Wednesday hurt the stock. It fell as much as 5 percent and was the biggest percentage loser among BSE largecap stocks.
Tata Steel was trading 3 percent lower ahead of its quarterly earnings later in the day.
Bucking the trend, Future Retail gained over 4 percent after posting a quarterly profit compared with a loss a year earlier.
(Reporting by Karen Rebelo in Mumbai; Editing by Anand Basu)