* BJP on course for historic majority – Election Commission data

* Party stuns opposition with results in Uttar Pradesh, West Bengal

* Long-time foe Pakistan tests a missile

* Indian stock markets hit historic highs, later shed gains

By Alasdair Pal and Mayank Bhardwaj

Official data from the Election Commission showed Modi’s Hindu-nationalist Bharatiya Janata Party (BJP) ahead in 300 of the 542 seats being contested, up from the 282 it won in 2014 and more than the 272 seats needed for a majority in the lower house of parliament.

That would give it the first back-to-back majority for a single party since 1984.

“Together we will build a strong and inclusive India,” Modi said on Twitter.

“India wins yet again!”

Modi’s victory boosted financial markets as investors expect his government to continue to pursue economic reforms. He will be under pressure to provide work opportunities for the tens of millions of young people coming on to the job market in the next few years and to boost depressed farm incomes.

“The immediate challenges are to address employment, the issue of agricultural income and revive the banking sector,” said Madan Sabnavis, chief economist at Care Ratings in Mumbai.

But making good on his promise of unity will be difficult as the BJP campaign was often divisive, and members of the minority Muslim community expressed fears that they were being treated as second-class citizens.

His pledge to take a strong stand against a separatist movement in the Muslim-majority Kashmir region has added to tensions with nuclear-armed rival Pakistan.

Members of his party now want him to take a harder line on national security, as well as build a Hindu temple on the site of a mosque that was demolished by a Hindu mob in Ayodhya in 1992.

“I want Modi to finish terrorism from Kashmir (and) make Pakistan bite the dust again and again,” said Shekhar Chahal, a BJP worker from New Delhi.

“I am confident that Modi will also make the temple in Ayodhya.”

CELEBRATIONS BEGIN

Cheering supporters set off firecrackers and showered the mastermind of the campaign, BJP President Amit Shah, with petals as he arrived at party headquarters in New Delhi.

“It’s a stamp of approval by voters on the honest and decisive leadership of Prime Minister Modi,” said Nalin S Kohli, a BJP spokesman.

Congress leaders were sombre.

“Why despite a weak economy people preferred the BJP is something we have to understand,” said Salman Soz, a party spokesman.

“People have given them a second chance. I hope they use it well.”

The NDA’s predicted margin of victory, at 348 seats to 85 for the Congress-led United Progressive Alliance, according to TV channel NDTV, is much larger than surveys indicated in the run-up to the vote.

Most polls indicated a victory for Modi’s alliance but short of an overall majority.

Final results are due by Thursday evening.

(Click HERE https://reut.rs/2VXBoxz to view a graphic showing live updates of India’s elections results)

SECURITY SWING

Modi was under pressure when he began campaigning, losing three state elections in December amid rising anger over farm prices and unemployment.

However, campaigning shifted towards India’s relationship with Pakistan after a suicide bomber killed 40 Indian police in the contested Kashmir region in February.

Modi ordered an air strike on what India said was a militant training camp on the Pakistani side of the border, a tough response that benefited the right-wing BJP, analysts said.

Pakistan has this week signalled a willingness to open talks with India, but in a possible warning, it announced that it has conducted a training launch of a surface-to-surface ballistic missile, which it said was capable of delivering conventional and nuclear weapons at a range of up to 1,500 miles.

The BJP has also capitalised on the star power of Modi, a frenetic campaigner, as well as its superior financial resources.

It outspent Congress by six times on Facebook and Google advertising, data showed, and by as much as 20 times overall, sources told Reuters this month.

The poor showing by Congress, that was ahead in just 52 seats, will lead to questions over the leadership of Rahul Gandhi, a scion of the Nehru-Gandhi dynasty whose father, grandmother and great grandfather all served as prime minister.

Gandhi trailed the BJP candidate in the Amethi constituency that his family has held almost continuously for the last four decades.

“The Congress party has not been able to improve at all,” said Rahul Verma, a fellow at the centre for Policy Research in New Delhi.

“One big story is the emerging challenge for the Congress to remain a national alternative to the BJP. That now is under question.”

STRONG LEADER

In populous Uttar Pradesh state, which sends the largest number of lawmakers to parliament, the BJP defeated a powerful alliance of caste-based parties campaigning on improving the lot of rural folk, leading in 60 of 80 seats on offer.

“After the air strike on Pakistan, almost all these important issues started fading and farmers, including many members of my family decided to cast their ballot for the BJP,” said Raghubar Das, 55, who grows rice and wheat on the outskirts of Ayodhya town.

“Mind you, they didn’t vote for the BJP, they voted for Modi. Everyone loves a strong a leader.”

The party also won seats in several states where it has long struggled, including West Bengal, where it targeted the Trinamool Congress, a powerful regional party in campaigning that often turned violent.

The BJP was leading in 19 of 42 seats in the state, significantly better than the two it won in 2014, data showed.

Investors gave a big thumbs up to Modi’s victory, hoping his government will push through reforms. Indian stocks surged more than 5 percent this week and hit record highs on Thursday, as it became clear that Modi would clinch a second term.

The euphoria quickly evaporated though, with stocks and the rupee ending weaker on the day, as the focus shifts back to an economy that is faltering, even as the U.S.-China trade war rages and global oil prices tick higher.

(Reporting by Alasdair Pal, Aftab Ahmed, Sanjeev Miglani, Nigam Prusty, Neha Dasgupta, Devjyot Ghoshal and Munsif Vengattil in NEW DELHI, Mayank Bhardwaj in AYODHYA, Subrata Nag Choudhury and Abhirup Roy in KOLKATA and James Mackenzie in ISLAMABAD Writing by Alasdair Pal Editing by Nick Macfie and Robert Birsel)