After two and a half hours of counting, figures from the Election Commission showed Modi's Bharatiya Janata Party (BJP) in the lead in 283 seats out of 542 with the rival Congress on just 51, AFP reported.
If confirmed -- no actual results have been published yet -- this would push the Hindu nationalist BJP over the 272 seats needed for a majority on its own, and beat its tally of 282 when Modi swept to power in the world's biggest democracy in 2014 with the first majority in 30 years.
The result would give the BJP and its allies, which early trends suggested would win close to 50 seats, a commanding majority of around 330 seats.
Having risen strongly since exit polls on Sunday had pointed to a Modi victory, Indian stock markets on Thursday hit record new highs shortly after opening, with the Sensex and the Nifty indices both up more than two percent.
After an exercise not short of staggering statistics, the 600 million votes cast in purportedly the world's most expensive democratic exercise -- costing more than $7 billion, experts say -- were set to be counted in just one day.
Rahul Gandhi of the Congress party, hoping to become the fourth member of the Gandhi-Nehru dynasty to lead India, had on Wednesday dismissed the exit polls.
"Don't get disappointed by the propaganda of fake exit polls," Gandhi, 48, told the party faithful on Twitter.
Early trends also suggested that Gandhi was in a tight race in his constituency of Amethi in Uttar Pradesh state, a seat held by his family for generations.
There are 542 seats available and final results are due by Thursday evening.