Preliminary results and media projections at the climax of the marathon six-week election showed the Bharatiya Janata Party (BJP) and its hardline leader Narendra Modi on track for the first parliamentary majority by a single party in 30 years.
Modi, the 63-year-old son of a low-caste tea seller tainted by anti-Muslim violence in his home state of Gujarat in 2002, wrote on Twitter that "India has won. Good days are coming."
The stunning results exceeded all forecasts. Firecrackers exploded at BJP offices around the country and sweets were handed out in celebrations that began only a few hours after the first figures filtered out.
Media projections showed the BJP winning more than the 272 seats required for a majority on its own in the 543-seat parliament, with victories by its allies taking it easily in excess of 300.
"We accept defeat. We are ready to sit in the opposition," senior Congress leader and spokesman Rajeev Shukla told reporters at party headquarters in New Delhi as preliminary results showed it winning only 49 seats.
"Modi promised the moon and stars to the people. People bought that dream," he added.
Stock markets, which have risen 5.0% in the past week, surged again. The benchmark sensex index showed a gain of 4% on Friday at a record high.
Investors and the wider public have rediscovered heady — many say unrealistic — optimism about the world's second-most populous nation after years of frustration about low economic growth, rising food prices and corruption.
The disastrous showing for Congress is another blow to the scion of the Gandhi dynasty, 43-year-old Rahul, whose first performance as chief campaigner will likely lead to acrimonious fallout.
The country's most illustrious political family has provided three prime ministers but preliminary results showed Rahul with only a wafer-thin lead in his constituency of Amethi.
A group of Congress supporters shouted slogans in support of Rahul's more popular sister Priyanka outside party headquarters on Friday.
"The politics of inheritance, the politics of dynasty, the politics of entitlement is being punished," BJP spokesman Ravi Shankar Prasad told the CNN-IBN news channel.
Modi has reinvented himself from a controversial regional leader accused of turning a blind eye to religious riots in 2002 to an aspiring prime minister intent on helping India fulfil its potential.
After a presidential-style campaign built around him and his record during 13 years running Gujarat, expectations are sky-high of what Modi will deliver in a chaotic and still poor country that is home to a sixth of humanity.
Modi's promises to revive the flagging economy have won him corporate cheerleaders, while his rags-to-riches story and reputation as a clean and efficient administrator satisfy many Indians' desire for strong leadership.
He was always assured the votes of his core Hindu nationalist supporters, but his election pitch has drawn the urban middle classes as well as the poor, whose loyalty has traditionally been to Congress and its welfare schemes. The BJP's previous best showing was in elections in 1998 and 1999 when it won 182 seats and ran the country until a shock defeat to Congress in 2004.
While 81-year-old outgoing Prime Minister Manmohan Singh was hailed by US President Barack Obama as a "wise and decent man", Modi would be an awkward prospect for Washington and other Western powers.
Elected three times as chief minister in his home state, Narendra Modi was boycotted by the US and European powers for a decade over the 2002 riots in Gujarat that left around 1,000 people, mostly Muslims, dead. He denies that he turned a blind eye to the bloodshed and his focus on the campaign trail has been jobs.
But the BJP manifesto includes a pledge to build a temple to honour the Hindu god Ram at the site of a former mosque in northern India, a religious flashpoint that sparked deadly rioting in 1992.
"He has to succeed on the economy and that's the thing on which he will be judged," said Christophe Jaffrelot, an academic on India from Sciences Po university in Paris and King's College London.
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