BENGALURU, June 4 (Reuters) - Indian Prime Minister Narendra Modi is expected to win a record-equalling third consecutive term in office as the counting of 642 million votes in the world's largest election began on Tuesday.

However, Indian stocks and the rupee fell sharply, while bond yields rose, as early trends suggested Modi's Bharatiya Janata Party (BJP)-led alliance leading in early voting trends but the margin of victory may not be as large as exit polls suggested.

Here are some reactions from market analysts:

KRANTHI BATHINI, DIRECTOR OF EQUITY STRATEGY, WEALTHMILLS SECURITIES, MUMBAI

"The numbers for National Democratic Alliance (NDA) are subdued and below expectations. So we are witnessing profit booking as investors are nervous. We need to wait one more hour for greater clarity. But we can see profit booking continuing and extending if these trends continue."

"Indian National Developmental Inclusive Alliance (INDIA) getting about 200 seats shows strength in the opposition and that has triggered profit booking. But early hours, one more hour will tell us clear trends."

"In case of a fractured mandate, markets will drop further, that's obvious, especially after exuberance in markets lately."

VIVEK BHUTORIA, PORTFOLIO MANAGER, EMERGING MARKET EQUITIES, FEDERATED HERMES, LONDON

"Markets have rallied around the expected election results and it is very hard not to be an optimist on India. India's economy is on track to grow by around 7% or so for the foreseeable future and, in nominal terms, maybe around 11%. The drivers of this growth are very sustainable in nature. Then you look at manufacturing, where India has been lagging behind other economies, but we are now seeing emphasis on policies to increase India's share of manufacturing."

"Policies are being put in place to attract investments and the realignment of the global supply chain is going to benefit India over time. We are already starting to see some benefits in terms of electronics and chemical exports."

CHARU CHANANA, HEAD OF CURRENCY STRATEGY, SAXO, SINGAPORE

"The market is likely cautious as it is still not evident if the ruling party will be able to command a 400-seat majority that they had set out to do. However, a comfortable victory will still mean that Indian markets continue to see increasing flows on the back of a strong macro environment coupled with the structural tailwinds of demographics, digitization and increasing penetration in global manufacturing cycles."

(Reporting by Bharath Rajeswaran in Mumbai, Ankur Banerjee in Singapore, Compiled by Indranil Sarkar in Bengaluru; Editing by Savio D'Souza)