Indian Prime Minister Narendra Modi's Bharatiya Janata Party (BJP) has won handsomely in an election in his home state Gujarat and has snatched power from rival Congress from the northern state of Himachal Pradesh, reported BBC.

A combined opposition led by the Congress party had mounted a tough challenge in Gujarat, hoping to weaken Modi in his home base by exploiting discontent over a lack of jobs and a national sales tax that hit business.

As votes are counted after the state elections, the BJP is leading in 99 of the 182 assembly seats, according to election authorities. The main opposition Congress is ahead in 77.

Gujarat is a stronghold state for the BJP, which has governed for 22 years. The Congress has conceded victory to the BJP.

The BJP also won in Himachal Pradesh - where it is leading in 44 of the 65 seats, while the Congress is ahead in 21.

Modi tweeted, thanking voters in both states while assuring them of economic development.

The results of the election signal a win for the "politics of development", BJP president Amit Shah said, speaking at a press conference at the party headquarters in Delhi.

The BJP's majority had been under threat from the opposition alliance, polls suggested.

Stock markets have recovered after opening lower on Monday after early results had put the Congress ahead.

The decisive win is a broad endorsement of Modi’s decision last November to invalidate 86 per cent of all currency in circulation as part of an anti-corruption drive, reported The Guardian.

Though the demonetisation decision was botch, it said, Modi successfully framed the policy as a decisive strike against the untaxed hoards of “black money” accumulated by the country’s wealthy elites.

That strategy appears to have paid off, helping to broaden the BJP’s appeal beyond its traditionally base of upper-caste Hindus and merchants, and sustaining the extraordinary personal popularity Modi continues to enjoy among the Indian public nearly three years since his election’, it stated.

Modi was chief minister of Gujarat three times and his track record there helped propel him to success in national elections. To lose the state polls would have been a huge loss of face.

He held more than three dozen meetings in the state and campaigned on economic development and Hindu nationalism to woo voters, reported Reuters.

The prime minister's decision to ban high-value currency notes in November 2016 and the way the newly introduced Goods and Services Tax was implemented are believed to have fuelled anger against the party in Gujarat.

State BJP member R Bala told Reuters news agency the election had been the "toughest" they had fought there.

Polling in Gujarat and Himachal Pradesh was held between 9 and 14 December.

More than 68 per cent of Gujarat's 43 million eligible voters cast their ballots, while Himachal Pradesh saw a voter turnout of about 74 per cent.

The international media across the globe has lauded the BJP’s thumping victory in the recently held assembly elections, especially its win in the politically crucial state of Uttar Pradesh.

It credited BJP’s landslide victory to Prime Minister Narendra Modi, whom they hailed as a ‘mesmerising orator’. Calling the victory in UP as the biggest prize, where it had not held a majority since 1991, several media houses said the win will cement and consolidate PM Modi’s ‘dominance of Indian politics and put the prime minister on track for re-election in 2019’.

They said the victory came as a surprise given the demonetisation step taken by the BJP at a crucial time. In the historic victory in UP, the BJP on Saturday defeated the major parties of the state by winning a staggering 312 seats out a total 403.