The Congress party, the national secular force that has run India for all but 13 years since independence, was crashed to its worst ever result after a decade in power.

"Modi promised the moon and stars to the people. People bought that dream," senior Congress leader and spokesman Rajeev Shukla told reporters as preliminary results showed the party winning only 42 seats.

Outgoing Prime Minister Manmohan Singh, who said in January that Modi would be "disastrous for the country" after "presiding over the massacre of innocents", called to congratulate him, his office said.

India's main Bombay Stock Exchange index, which has risen five percent in the past week, surged more than six percent in the morning but tapered its gains to close up 0.9 percent.

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 weak leadership, rising food prices and corruption.

"There's a very tough task ahead that will take time to resolve, the economic problems are quite acute. There's no magic wand," D.K. Joshi, chief economist of credit rating agency Crisil, told AFP.

India is in the grip of stagflation — growth has slumped to 4.9 percent from nine percent two years ago and consumer inflation is at a wage-eroding 8.6 per cent.

The disastrous showing for Congress is a humiliating blow to the scion of the Gandhi dynasty, 43-year-old Rahul, whose first performance as chief national campaigner will lead to acrimonious fallout.

The country's most illustrious political family has provided three prime ministers and Rahul's mother Sonia is president of the party. "We need a complete overhaul, starting from the top," one senior Congress leader said on condition of anonymity.

Earlier in the day, a group of Congress supporters shouted slogans in support of Rahul's more popular sister Priyanka outside party headquarters.