(Corrects day to Tuesday from Wednesday in paragraph 1)
* NSE index surges up to 1.7 pct to record
* Rupee gains to strongest since July 2013
MUMBAI, May 12 (Reuters) - Indian shares are seen surging to a record high and the rupee and bonds could hit new multi-month highs when trading opens on Tuesday after exit polls showed Bharatiya Janata Party and its allies winning a majority in the country's elections.
The projections could especially benefit domestically-focused shares such as ICICI Bank as the BJP-led coalition is widely seen as setting the stage for a revival in confidence, investment and growth in Asia's third-largest economy.
India's NSE index has already surged 18.7 percent since Narendra Modi became the BJP prime minister candidate on Sept. 13. Foreign investors have been especially strong buyers into the rally, with a net $20.1 billion in purchases last year and about $4.3 billion so far in 2014.
The index surged 4.3 percent over Friday and Monday hitting record highs in each of the sessions. Gains in Indian-based assets in global markets surged after the exit polls, including the 1-month rupee NDF and U.S.-listed shares of Indian banks such as ICICI Bank.
Still, analysts warn against exuberance as exit polls by media organisations have proven unreliable in the past. The actual results for India's five-week long elections will be out on Friday.
"A lot of expectation-based flows have come through. Looking through the noise, if the base scenario (BJP majority) happens, two things change structurally - first, you get a pro-investment government and one that is focused on infrastructure," said Salman Ahmed, global fixed income strategist for Lombard Odier Investment Managers in London.
"A strong government that understands the need for infrastructure should be able to get reforms in place and put in place the conditions for long-term growth.
Four major exit polls for India's general election forecast a victory for the opposition coalition with results ranging from 261 to 289 parliamentary seats.
BJP and its National Democratic Alliance would need to win 273 seats in the 545-seat parliament to clinch the most seats in India's lower house, but analysts say even a number close to that would be seen as enough to lead to a stable government.
A win of above 240 seats could spur stock market gains of 15-20 percent over the next month, Macquarie had estimated in a report ahead of the exit polls.
Markets are already factoring in such a scenario. The broader NSE index gained as much as 2.35 percent to a record high of 7,020.05 points on Friday, surpassing its previous record high of 6,871.35 points hit on Friday.
The partially convertible rupee rose to as high as 59.51 per dollar, its strongest since July 29, while the benchmark 10-year bond yield fell as 4 basis points to 8.71 percent, a level last seen on March 13.
"Infrastructure, engineering, cement, power and industrial stocks should gain if a Modi-led government comes to power," said UR Bhat, managing director, Dalton Capital Advisors,
"One should take exit polls with a pinch of salt, but people will latch on to them as they are the only information available ahead of actual results."
Domestic-oriented shares have led the rally, with the NSE bank sub-index hitting a record high. ICICI Bank Ltd gained 2.2 percent, for a cumulative gain of 27.3 percent in 2014 compared to NSE index gain of 11.26 percent.
Infrastructure shares also gained, on hopes a Modi government would revive investments. Ambuja Cements up 1.8 percent, while state-run power equipment maker Bharat Heavy Electricals Ltd surged 2.1 percent. (Writing by Rafael Nam; Additional reporting by Himank Sharma, Swati Bhat, Suvashree Dey Choudhury, and Neha Dasgupta in MUMBAI and Sujata Rao-Coverley in LONDON; Editing by Shri Navaratnam and Toby Chopra)