0415 GMT: NIFTY, BSE INDEX HIT LIFE HIGHS IN ANTICIPATION OF A MODI WIN Both of India's major stock indices climbed to historic highs in morning trade as euphoria continued over the prospect of Prime Minister Narendra Modi returning to power for a second term.

The benchmark Nifty index was up about 0.3% at 11,863 points and the Bombay Stock Exchange index gained about 0.37% to 39,97 points.

On Monday, both indices posted their largest one-day gains since September 2013 after exit polls showed Modi's Bharatiya Janata Party (BJP)-led coalition winning the general election.

The partially convertible rupee was at 69.767 to the dollar in early trade, losing some of its gains from Monday, when it closed 0.7% higher.

Investors expect the rupee to hold in a 69-72 per dollar range in the medium term with global oil prices having the potential to push it lower.

The benchmark 10-year bond yield closed trading at 7.29 percent on Monday, down 7 basis points on the day.

Mayuresh Joshi, senior vice president and fund manager at Angel Broking, however cautioned that if the final results, due on Thursday, were contrary to the exit polls, "then 10,900 is the level to watch out for in Nifty, because if that breaks we will see further downside".

0230 GMT: ING ASIA SAYS ELECTION RESULTS STILL UNPREDICTABLE ING Asia said in a research note that despite exit polls showing the BJP coalition returning to power, the results remained unpredictable.

"Our base case remains seeing the Modi administration clinging to power for the second term, but given the anti-incumbent sentiment we saw sweeping through last year's state-level elections in Chattisgarh, Madhya Pradesh, and Rajasthan, there remains the potential for an election surprise," it said.

"We believe the markets are priced in for (our) baseline scenario of a BJP-led coalition retaining power albeit with a thin margin. Such an outcome means that the election results should have little impact on markets, and in turn should be left to be driven by non-political factors, domestic and external."

A landslide win for the BJP alliance would come as a big positive for markets with the rupee testing its March high of 68.42 to the dollar and eventually settling in a 66-68 range, it said.

Any government led by an opposition coalition would be negative for markets, it said. 0015 GMT: AFTER EXIT POLLS, ATTENTION SHIFTS TO NEW GOVERNMENT After exit polls heavily tipped the BJP alliance to return to power, attention is shifting to the new cabinet and the challenges facing his government.

India's Finance Minister Arun Jaitley attends a news conference in New Delhi. REUTERS/Saumya Khandelwal

Finance Minister Arun Jaitley looks set to retain his post if Modi's win is confirmed by the official results on Thursday. But Jaitley is a diabetic and had to skip the interim budget in February when he was in hospital in the United States, getting cancer treatment. He had a kidney transplant in May last year.

If his health worsens, Railways and Coal Minister Piyush Goyal could take over.

BJP party chief Amit Shah has invited alliance partners for a dinner meeting on Tuesday to discuss the formation of the new government, two party sources said.

Local media said the council of ministers would also meet Modi and Shah. 1130 GMT: INVESTORS LOOK FOR REFORM

Market strategists said the rally in stocks and the rupee would be short-lived unless the new government brought in meaningful reform.

Nilesh Shah, managing director at Kotak Asset Management Company, said: "The equity market today is pricing in (a Modi) government, series of rate cuts, revival in earnings' growth, revival of investments, managing trade deficit with China, relatively stable oil prices at current level.

"If these assumptions are met, then market has room to move ahead," he said on the Reuters Trading Indiachatroom.

As election dust settles, jobs, trade, security high on government's to-do list 0650 GMT: SOME ASK, CAN EXIT POLLS BE WRONG? Some opposition politicians in India are taking comfort in the wrong predictions made by pollsters in the U.S. presidential election in 2016, the Brexit referendum also in 2016 and in last week's Australian election.

Most of the exit polls in India show Modi's ruling Bharatiya Janata Party (BJP)-led alliance winning about 300 seats in the 543-member parliament, a comfortable majority and above predictions made before the six-week election got underway in April. The opposition Congress party was a distant second.

Votes will be counted on Thursday and results are likely the same day.

"I believe the exit polls are all wrong," said Congress leader Shashi Tharoor in a tweet. "In Australia last weekend, 56 different exit polls proved wrong. In India, many people don’t tell pollsters the truth fearing they might be from the government. Will wait till 23rd for the real results." "Quiet Australians" are the latest to upset election forecasters' expectations Officials seal an Electronic Voting Machine at a booth in Kolkata after voting closed on Sunday. REUTERS/Rupak De Chowdhuri 0128 GMT: FOUR FACTORS THAT HELPED MODI - VETERAN EDITOR

Prime Minister Modi was helped in the election by four key factors, wrote Shekhar Gupta, editor-in-chief of The Print news portal. India's Prime Minister Narendra Modi waves at his supporters during a roadshow in the city of Varanasi. REUTERS/Adnan Abidi

India's upper castes, usually divided or supporters of the opposition Congress party, appear to have consolidated behind Modi, said Gupta, a veteran writer on politics and television talk-show host.

The BJP, he added, had overcome "disastrous macroeconomics with effective microeconomics", providing some ofIndia's poorest with toilets, loans, cooking gas connections, housing and electricity.

"These schemes have touched far too many people in quick time to not matter to them," he wrote. "They neither understand nor bother about whether the GDP is up or down, reliable or fudged. They are too poor to yet be in the organised job market."

Thirdly, Gupta said, Modi's government had a good record of building hard infrastructure, roads, bridges and ports. And lastly, he said, the huge chunk of voters who are under 22 have emerged as a huge support base for Modi.

"They've known only one leader, heard just one message, have no reference to the pre-Google context," he said. "Most important: They mostly haven't yet gone out in the job market."

Gupta cautioned while the four factors had helped Modi, he was not sticking his neck out with a prediction since votes were still to be counted.

Other political strategists said Modi's presidential-style campaign and his aggressive response after a surge in tensions with Pakistan in February-March appear to have worked well, and overcome concerns about unemployment and falling farm incomes.

Anti-Pakistan wave helps Modi

Other factors that could have helped the BJP were their enormous resources, and the inability of the opposition Congress party, led by Rahul Gandhi, to form meaningful alliances.

(Raju Gopalakrishnan, Karishma Singh)