Now, all bets are off after exit surveys last week from the marathon polls pointed to a hung parliament and spooked the stock market into plunging nearly four percent, its biggest one-day loss in three years -- larger even than after the 9/11 attacks in the United States.

The market soared 73 percent in 2003, helped by a record more than seven billion dollars from foreign investors and forecasts economic growth would top eight percent this year.

Should investors now be fearful politics could take centre stage?

"The markets are right to take fright," said Saumitra Choudhury, economic adviser to ICRA, a leading Indian credit rating agency.

"Everyone was so convinced there would be no hitch" in Vajpayee's Bharatiya Janata Party (BJP) forming a strong majority government with the help of allies, he said. "Now these results have thrown open a whole range of other possibilities the markets hadn't factored in."

Results of the five-phase elections in the world's biggest democracy of over one billion people will be known May 13. But the horse-trading to form a coalition government could drag on for weeks if there is no clear winner.

While the exit polls vary in projected seat tallies, they all show the same trend -- a much tighter race than initially forecast, analysts say.

The fear of investors is not that a BJP-led government will be replaced by a coalition led by the opposition Congress which began the drive to liberalise the economy in 1991 and has several pro-reform ex-finance ministers in its ranks.

"There cannot be a more pro-reform face (Congress party) than this," Congress economic spokesman Jairam Ramesh said.

Rather, investors worry whichever national party forms a government, it might be so weakened by demands from reform-hostile allies it would need to keep it in power, it could not push ahead aggressively with India's economic makeover and open the country to competition and foreign investment.

"If there are problems, they'll have to spend a lot of time keeping the flock together and everything from privatisation to tax reforms would suffer," Bidisha Ganguly, Confederation of Indian Industry chief economist said.

"It could be a very messy scenario," she said.