A win for a BJP-led coalition is widely seen as setting the stage for a revival in confidence, investment and growth as Asia's third-largest economy steers through a rough patch.
BJP and its National Democratic Alliance would need to win 273 seats in the 545-seat parliament to clinch the most seats in India's lower house, but analysts say even a number close to that would be seen as enough to lead to a stable government.
NSE NIfty has surged 17 percent since Narendra Modi became the BJP candidate on Sept. 13, as the opposition party is perceived by markets as being more business friendly at a time when the economy is growing at its slowest pace in a decade.
The optimism comes even as exit polls by media organisations - due to be released after 6.30 pm, once the last votes are cast - have proven unreliable in the past. Actual results for India's five-week long elections are out on Friday.
UR Bhat, managing director, Dalton Capital Advisors, who advises foreign investors, says domestic-oriented shares could gain on expectations the BJP will be able to revive investments and spark a broader economic recovery.
"Infrastructure, engineering, cement, power and industrial stocks should gain if a Modi-led government comes to power," said Bhat.
"One should take exit polls with a pinch of salt, but people will latch on to them as they are the only information available ahead of actual results.
The broader NSE index gained as much as 1.7 percent to a record high of 6,975.70 points, surpassing its previous record high of 6,871.35 points.
Meanwhile, the rupee strengthened to as much as 59.51 per dollar, its strongest level since July 29, 2013 from its close of 60.02/03 on Friday.
At these levels, the currency is up around 16 percent from the record low of 68.85 hit in late August, when Indian markets were gripped by its worst market turmoil since the balance of payment crisis in 1991.
Domestic-oriented shares led the rally, with the NSE bank sub-index hitting a record high.
ICICI Bank gained 2.2 percent, while Larsen & Toubro Ltd was up 2 percent.
Infrastructure shares also gained, with Ambuja Cements up 1.8 percent, while state-run power equipment maker Bharat Heavy Electricals Ltd surged 2.1 percent.