At the end of the fourth day, New Zealand was 571-6 with Jimmy Neesham 67 not out with McCullum.
McCullum made his highest test score _ the second-highest score by a New Zealand test batsman after Martin Crowe's 299 against Sri Lanka _ and is poised to become the first New Zealander to reach a test triple century on the final day.
It's been a pretty special day's test cricket,'' Watling said. ``Obvious Brendon's performance was phenomenal.
He's got us in a great situation in this match which is crucial. I'm definitely proud of my efforts, disappointed to get out when I did. It was obviously the third new ball and it would have been nice to kick on a bit but I'm exceptionally proud.''
Watling was finally out for 124 in a partnership which produced 352 runs in 8-and-a-half, steering New Zealand from the threat of defeat to a position from which they can conceivably win the match and series.
New Zealand leads the two-match series 1-0 after winning the first test at Auckland by 40 runs.
McCullum's double century was his second in four innings after his 224 in the first test at Eden Park and the third of his career. All three have been achieved in tests against India, including his previous top test score of 225 at Hyderabad in November, 2010 and he is only the seventh batsman in test history to score a double century in consecutive tests.
New Zealand had been 94-5 when McCullum and Watling came together four overs after lunch on the third day Sunday, battling the overcome the 246-run lead India had achieved by reaching 438 in reply to its first innings of 192.
The sixth-wicket pair first helped New Zealand erase that deficit without further loss in the 94th over of its second innings, then guided it to 252-5 at stumps on the third day.
Watling, a former opening batsman turned wicketkeeper, and McCullum, a former wicketkeeper turned batsman, carried on relentlessly, guiding New Zealand to 347-5 at lunch and to 440 at tea, still only five wickets down and with four sessions of the match remaining.
With each run the odds of New Zealand saving the match lessened and the longer odds of winning the match also began to fall.
The partnership was finally broken, after exactly 510 minutes, when South Africa-born Watling was trapped lbw by Mohammed Shami off his third delivery with the third new ball.
McCullum needed occasional treatment for his chronic back injury throughout the fourth day as he continued to play an innings of outstanding diligence and concentration. He had batted more than 12 hours by stumps in the longest-ever test innings played by a New Zealand batsman.
India went into the match with three fast bowlers and, as the sixth wicket partnership stretched on, their workload had become almost intolerable. Ishant Sharma (39 overs), Zaheer Khan (33 overs), who had taken 3-129 at stumps, and Mohammed Shami (40 overs) had been progressively worn down, though they worked hard.
Spinner Ravindra Jadeja bowled 49 overs and took 1-108 as New Zealand scored 318 runs Monday for the loss of only one wicket.