A key Indian opposition leader and the former chief minister of the capital province Delhi lost his seat in local elections on Saturday, with Prime Minister Narendra Modi's Hindu nationalist party tipped for victory.

Arvind Kejriwal lost his seat to Modi's Bharatiya Janata Party (BJP), according to election commission results, reflecting expected wider losses by his Aam Aadmi Party (AAP), which has governed the sprawling megacity of more than 30 million people for most of the past decade.

Modi's BJP is in government in the national parliament, but has not controlled the local legislature in the capital New Delhi since 1998.

Chanting BJP supporters danced in joy outside its New Delhi headquarters as vote results from the election on Wednesday were counted, waving flags and posters of Modi.

Counting continues -- with the AAP and BJP level on nine declared seats -- but the election commission say Modi's party is leading in more than two-thirds of the 70-seat assembly.

"Our victory is a sign of the people's faith in Prime Minister Modi's vision of progress," interior minister and BJP stalwart Amit Shah said in a statement.

"The Delhi mandate shows that people can't be misled with lies every time."

Kejriwal, who rode to power as an anti-corruption crusader a decade ago, spent several months behind bars last year on accusations his party took kickbacks in exchange for liquor licences, along with several fellow party leaders.

Kejriwal has denied wrongdoing and characterised the charges as a political witch hunt by Modi's government.

He was one of the key pillars of an opposition block formed ahead of India's general elections last year, when the BJP suffered significant losses despite holding on to power. (AFP)