(Corrects spelling of commission, paragraph 1)
* Counting of more than 600 mln votes begins
* Modi's BJP takes commanding lead - TV channels
* Coalition led by PM Modi's alliance expected to win second term
* National security the major issue, to Modi's benefit - analysts
* Indian stock markets hit historic highs
By Abhirup Roy and Aftab Ahmed
NEW DELHI/KOLKATA, May 23 (Reuters) - Prime Minister Narendra Modi's party is set for a historic victory as India began counting on Thursday hundreds of millions of votes from its general election, according to data from the Election Commission.
The National Democratic Alliance (NDA), led by Modi's Hindu nationalist Bharatiya Janata Party (BJP) was ahead in 324 seats, with the opposition United Progressive Alliance winning in 111, after 10 a.m. (0430 GMT), about two hours after the counting of about 600 million votes began, Indian TV channel NDTV said.
NDTV and rival channel CNN News 18 have called the election for Modi's alliance.
Official data from the Election Commission showed the BJP ahead in 279 seats - more than the 272 seats needed to command a majority in the lower house of parliament - which would give it the first back-to-back majority for a single party since 1984. The main opposition Congress Party was ahead in 52.
There are 542 seats available and final results are due by Thursday evening.
(Click HERE https://reut.rs/2VXBoxz to view a graphic showing live updates of India's elections results)
The NDA's predicted margin of victory is much larger than surveys indicated in the run-up to the vote, when most polls showed it would be the largest alliance but would fall short of an overall majority.
At the BJP's headquarters in New Delhi, the mood was upbeat, with party workers cheering as TV channels reported the growing lead.
"It's a huge mandate for positive politics and the policies of Narendra Modi," said GVL Narasimha Rao, a BJP spokesman.
"It's a huge win for India, we are humbled by the magnificence of this victory."
Congress leaders were sombre.
"We could have done better, the BJP seems to have exceptionally well," Salman Soz, a Congress spokesman told NDTV.
"Our weak point is we have been disorganised."
Modi was under pressure when he began campaigning, losing three state elections in December amid rising anger over farm prices and unemployment.
However, campaigning shifted towards India's relationship with nuclear-armed rival Pakistan after a suicide car bomb killed 40 Indian police in the contested Kashmir region in February, to the benefit of the right-wing BJP, analysts said.
"National security became the discussion," said Harsh Pant, a political analyst at the Observer Research Foundation think-tank in New Delhi. "It allowed the BJP to shirk some issues where it was weak."
The BJP has also capitalised on the star power of Modi, a frenetic campaigner, as well as superior financial resources.
It outspent Congress by six times on Facebook and Google advertising, data showed, and by as much as 20 times overall, sources told Reuters this month.
"The longer election certainly helps Modi: he loves contact with the people," Pant said. "The BJP's electoral machinery is also much more effective on the ground."
BATTLE FOR BENGAL
Police guarded voting centres in West Bengal on Thursday, where campaigning had turned violent as the BJP tried to take seats from the Trinamool Congress, a powerful regional party.
The BJP was leading in 17 seats in the state, that sends the third largest number of lawmakers to parliament, significantly better than its score of two seats in 2014, NDTV said.
"Wherever we go people are talking about a BJP wave in Bengal," said Tapas Das, a taxi driver in the state capital, Kolkata.
"Everyone wants to see a change."
The NDA held a meeting on Tuesday, at which Modi was garlanded with flowers by members of the alliance, to discuss its policy agenda for its second term in power. It has promised to double farmers' income and boost infrastructure spending over the next five years.
Indian stocks surged to historic highs as Modi headed for victory. The broad Nifty index was up 1.35% at 11,896.
The rupee headed towards 69.20 to the dollar, up from the 69.67 close on Wednesday, while the yield on the 10-year bond dropped 3 bps to 7.23%.
"Markets will heave a big sigh of relief as it favours continuity and familiarity in terms of roll-out of policies," said Ajay Bodke, CEO at financial services firm Prabhudas Lilladher.
(Reporting by Alasdair Pal, Aftab Ahmed, Sanjeev Miglani and Munsif Vengattil in NEW DELHI, Subrata Nagchoudhury and Abhirup Roy in KOLKATA, Indradip Ghosh and Vivek Mishra in BENGALURU Writing by Alasdair Pal Editing by Nick Macfie and Paul Tait)
Our Standards: The Thomson Reuters Trust Principles.