The Congress party was headed for a bruising defeat in key state elections, including in the capital, early results showed on Sunday, underlining the struggle it will face to cling to power in the Lok Sabha elections due next year.
Congress, led by the Nehru-Gandhi dynasty, has led the national government for two terms and is facing widespread voter anger over corruption, slowing growth and stubborn inflation.
Its main opponent, the Bharatiya Janata Party (BJP), was the clear winner in three big states that went to the polls, though with the count still on it was a neck-and-neck race in a fourth.
Markets are closely tracking the outcome of the elections, considered a bellwether of support for the BJP's business-friendly candidate for prime minister, Narendra Modi. Bond, rupee and share prices rose last week after exit polls predicted a strong BJP performance.
However, it was unclear how far Modi's vigorous campaigning of recent months had contributed to the BJP's strong showing.
The Congress's poor performance in the state Assembly elections may bring fresh pressure for an overhaul of its national campaign, which is headed by Rahul Gandhi.
Gandhi is the next in line in a political dynasty that began with his great-grandfather, Jawaharlal Nehru, India's first prime minister. Gandhi's campaign, focused on the Congress government's welfare programmes, has failed to capture the imagination of many of India's aspirational young voters.
However, Congress played down ramifications of the state elections setback.
"We accept the verdict of the people and we will introspect," said Congress minister Jayanthi Natarajan. "This is by no means the full picture for the general elections."
While the results are expected to add to the momentum Modi has built in dozens of packed rallies in recent months, India's fragmented political landscape makes national elections harder to predict.
In three of the four state elections counted on Sunday, the election was a two-way race between the BJP and Congress, which is unusual in a country whose states are increasingly governed by powerful regional parties. In the past, strong state results have not always translated into success in national elections.
In Delhi, the one state which saw a three-way contest, the BJP's likely victory after 15 years of Congress rule was tempered by an unexpectedly strong showing by the new anti-corruption Aam Aadmi (Common Man) Party, which could deny it the majority required to rule.
Supporters of the new party celebrated in the streets, waving brooms to symbolise sweeping out rotten politicians