May 23 (Reuters) - 0950: MODI VOWS TO BUILD STRONG, INCLUSIVE INDIA

Indian Prime Minister Narendra Modi promised to build a strong and inclusive nation as his Bharatiya Janata Party-led coalition headed for a massive victory in the general election.

"Together we grow," he said on Twitter. "Together we prosper. Together we will build a strong and inclusive India. India wins yet again!"

Rahul Gandhi, the leader of the opposition, conceded defeat and congratulated Modi. BJP supporters celebrate outside the party headquarters in New Delhi on Thursday. REUTERS/Adnan Abidi PM's close ally, Amit Shah, helped craft winning election strategy

1040 GMT: MOODY'S SEES FICAL CONSOLIDATION TO CONTINUE

William Foster, vice president of Moody's Sovereign Risk Group, said any credit implications of the election win would be determined by the new government's policies.

"At this stage, we expect the broad push towards fiscal consolidation to remain, although with greater policy emphasis on supporting low incomes," he said.

0915 GMT: WHY SHOULD MODI CHANGE A WINNING FORMULA, ASKS AUTHOR, INVESTOR RUCHIR SHARMA Modi may not bring about major reform as he heads to a second term in office, said Ruchir Sharma, a global investor and an author on economics and politics who has covered elections in India for over two decades.

"Indian leaders only reform when there is a crisis," Sharma said. "What's the compulsion for him (Modi) to do that? Why should he change from what he did in the first term?"

On a growing clamour for banking reform, he said: "Banking sector reform only means more privatisation, there's nothing else they can do there apart from throwing more good money after bad because the system is broken.

"The question is will he do that? And that for me remains doubtful." Prime Minister Narendra Modi at an election campaign rally in New Delhi earlier in the month. REUTERS/Adnan Abidi

New York-based Sharma's latest book, "Democracy on the Road", details his travels across India during elections.

He was in India during the current election as well.

"India has changed in a way that I have not seen in my last 25 years of covering elections," Sharma said. "I've never seen one personality dominate electoral trends like what's happened this time."

Modi, he said, had been able to position himself as a leader who is very comitted, working very hard. "Even if the results may not be there to show, his intent is what impresses people."

Modi has been criticised for following a muscular form of Hindu nationalism that has polarised the country, but Sharma said he was not able to pin that down.

One of things in his favour was a huge turnout of young voters. "Modi is the only name they have heard of because of the incredible marketing machine that he has," Sharma said.

By contrast, Gandhi was unable to put his stamp on the election despite being the scion of the fabled Gandhi-Nehru political dynasty.

"He has zero resonance," Sharma said. "Not one person ever in our travels told us he was going to vote for Rahul Gandhi. Some people may have told us they didn't like Modi and they would vote against Modi but there was not one positive vote for Rahul Gandhi." Rahul Gandhi, president of the main opposition Congress party, after casting his vote at a polling station in New Delhi on May 12. REUTERS/Adnan Abidi

Rahul Gandhi faces backlash over election drubbing 0900 GMT: OTHER ECONOMISTS URGE MODI TO INITIATE REFORMS AS HE HEADS FOR STRONG MAJORITY

Other economists and analysts urged Modi to bring strong reforms in his second term as trends in the counting of votes in the general election showed his alliance winning a landslide majority.

"We are seeing very strong signs that the economy is under pressure, with household income on the decline, and consumer staples, auto and discretionary space under pressure," said Aishvarya Dadheech, fund manager at Ambit Asset Management in Mumbai.

"When things are so bad, you don't need an unstable government on top of it - you need someone who can continue reforms and take bold decisions."

Paras Adenwala at Capital Portfolio Advisors in Mumbai said he expected Modi to "propel demand and facilitate asset creation" in his second term.

"The reforms in the financial sector would continue. Hope they now focus on labour and land reforms too."

On the foreign policy front, Avinash Paliwal, deputy director of the South Asia Institute at the University of London, said: "The China challenge has to be dealt with by improving India's manufacturing capability, improving India's defence architecture and force posturing.

"So a lot of work will have to go into strengthening the national vital core, especially of economy and defence."

Maidul Islam, a professor at the Centre for Studies in social Sciences in Kolkata, said the BJP was likely to become more aggressively nationalistic because that had played well.

"But at the same time, they will balance it out with populist policies at the ground level. That's going to be the combination," he said.

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

0645 GMT: STOCKS FALL BACK AFTER HITTING RECORD LEVELS, RUPEE GAINS MUTED

The broad Nifty index reached a record 12,041 points before falling back to close at 11,657, while the benchmark BSE index ended at 38,811 points after breaching 40,000.

"The thumping victory for BJP as per the early trends surpassing its winning tally of 2014 has pleasantly surprised even the bulls," said Jagannadham Thunguntla, research head at Centrum Wealth. "The continuation of policies and reforms is an added comfort. Post political outcome, going forward the narrative should come back to employment, economy and earnings."

The rupee was at 70.0 to the dollar after gaining to 69.37.

Television channels said trends showed the BJP alliance leading in about 350 seats with the main opposition alliance leading in about 90 constituencies. To win, a party needs to win 272 seats in the 543-member lower house of parliament. 0700 GMT: NEW GOVERNMENT HAS TO ADDRESS BANKS, JOBS, INFRASTRUCTURE

Modi's win promisrs policy continuity, but economists say the task before the new government is immense as growth slows and financial markets clamour for decisive and meaningful reform.

Jobs will define Narendra Modi’s next five years

"We are facing a liquidity and credit crisis - two separate issues which need to be handled differently," said Rajeev Pawar, group head for balance sheet management and investments at Edelweiss Financial Services in Mumbai.

"Just cutting rates or a new government will not bring rates down," he said in the Reuters Trading India chatroom.

Arguing for a sovereign bond issue by the government, he said: "Jobs need to be created. Jobs lead to income and consumption. But it's easier said than done. To revive the economy you need money and the government is already deeply in debt." Supporters of the BJP celebrate outside the party office in Gandhinagar, India. REUTERS/Amit Dave

The Mint newspaper said much needed to be done to convert the enthusiasm in financial markets to the real economy, including addressing faltering consumption.

"The crisis with India's non-banking financial companies is still unfolding and could put the financial system through more pain," it added. "Jobs remain worryingly scarce."

The new government's priority is likely to be on reforms on land, labour, privatisation and export promotion, Goldman Sachs said.

However, the Control Risks consultancy said: "Do not expect him (Modi) to carry out a wholesale privatisation of state-owned banks or loosen political control over lending decisions (which led to the debt crisis to begin with).

"At the same time, increased pressure over rural distress and unemployment will stoke Modi's economic populist instincts, which will likely see an increased focus on rural spending and handouts aimed at supporting small and medium-sized enterprises."

As election dust settles, jobs, trade, security high on government's to-do list

(Raju Gopalakrishnan, Karishma Singh, Savio Shetty and Divya Chowdhury)