Macquarie says markets are pricing in the opposition Bharatiya Janata Party winning 230 seats in the ongoing elections, calling that its "base case" as well.
Macquarie estimates a number around that range could spark gains of 5-10 percent over one month in Indian shares, while a number above 240 seats would spark 15-20 percent gains.
By contrast, should BJP and allies clinch less than 200 seats, Macquarie says markets could fall 15-20 per cent over the next month.
BJP and its allies would need 273 seats to clinch a majority, although analysts say a number near it would comfort markets and raise the prospect of a more stable coalition.
Macquarie says the drivers of a rally after positive elections results could continue to be cyclical sectors such as financials, industrials and infrastructure.
Its top-five recommended cyclical stocks to buy for election results include Larsen & Toubro Ltd, Axis Bank Ltd , State Bank of India, Adani Port and Special Economic Zone Ltd and IRB Infrastructure Developers Ltd.