Kathmandu, Nepal - India's politically fragile northern neighbour is closely watching events unfold in the Asian giant to the south following the landslide election victory of Hindu nationalist Bharatiya Janata Party led by Narendra Modi.

Mindful of the key role played by India in its political transition and New Delhi's immense leverage in the country, observers in Nepal are seeking clues to likely policy in the region.

Meanwhile, many in the country - the world's only Hindu monarchy until it was abolished in a stunning vote by the constituent assembly in 2008 - have high hopes on Modi's victory prompting a revival of Hinduism.

"The victory of Narendra Modi is good news for us, we are sure we will receive his goodwill," said Basudev Shastri, a pro-Hindu activist with National Religion Awareness Campaign. "I think we Nepalis will succeed in reclaiming Nepal as a Hindu nation."

Modi in his first reaction on foreign affairs, expressed commitment to strengthening relations with Nepal. "Nepal is an old and deeply valued friend," he wrote on Twitter.

Closely intertwined

Nepal's fate has always been closely intertwined with India, which shares an 1,800km open border with the landlocked nation and provides it with crucial imports.

Indian officials and leaders of the then ruling Indian National Congress and Communist Party of India (Marxist) played a critical role in the 2005 deal struck in New Delhi that paved the way for an end to a 10-year Maoist rebellion and growing protests against the unpopular king.

When the 240-year-old Hindu monarchy was abolished in 2008 and the country became a secular, federal, democratic republic, it angered BJP leaders, who criticised New Delhi for being a "silent onlooker" while the king was ousted "under the pressure of Maoists".

India's government interpreted it differently, with Pranab Mukherjee, then foreign minister and now president, acknowledging his country's role in regime change in Nepal in an interview with Al Jazeera in 2009.

"We persuaded the political parties which resorted to guns and violence, the Maoists in Nepal, to give up violence [and] participate in the mainstream national political activities," he told Al Jazeera.

Yet Nepal's transition since 2006 has been shaky and the first constituent assembly dominated by the Maoists - tasked with writing a constitution for the young republic - broke up in acrimony.

The former rebels were trounced in elections to a second constituent assembly in late 2013, and the centrist Nepali Congress and the Unified Marxist-Leninist (UML) party formed a coalition government early this year.

Neighbourhood policy

Nepal's Maoist leader Ram Karki said there may not be a drastic change in India's foreign policy, but that Modi may take more interest in its neighbour.

India is a regional power. It will pursue a balanced foreign policy. There are countries that it will have to pay respect to and there are countries which it can exert its power over Ram Karki, Maoist leader

"India is a regional power. It will pursue a balanced foreign policy. There are countries that it will have to pay respect to and there are countries which it can exert its power over. So, the approach would be to maintain a balance," he said.

Akhilesh Upadhyay, the chief editor of the Kathmandu Post, Nepal's leading English daily, said there is little to go on in trying to discern Modi's views towards Nepal.

"I have found very scant literature of substance on Modi's perspectives on Nepal - he comes from the western state of Gujarat which has no proximity to Nepal," he said.

Upadhyay said that a key question would be the extent to which Modi - a member of the right-wing Hindu organisation RSS (Rashtriya Swayamsevak Sangh) - will change once in power.

"It's too early to say but I think Modi's approach would be pragmatic," he said. "During his term as Gujarat’s chief minister, he forged ties with Japan and China. He has a strong duality and he may well focus on the East rather than the West."

Lokraj Baral, executive chairman of Nepal Centre for Contemporary Studies, a Kathmandu-based think-tank, also believes the change of government is unlikely to affect foreign policy and notes that during the election campaign, Modi distanced himself from Hindu nationalism.

"Over the weeks, he became moderate in his stance. Once a politician comes to power, he or she will be tamed," Bara; said.

However, Yubaraj Ghimire, a political commentator, said that the new Modi administration could review India's neighbourhood policy - with a consequent impact on Nepal's new political order.

"The fact that the BJP itself has said in its manifesto that India's neighbourhood policy has failed means it's obliged to review it and take effective and corrective steps," Ghimire told Al Jazeera.

Ghimire said that changes in Nepali politics were influenced by external forces.

"There's a group in India which played the crucial role in influencing radical changes in Nepal. And Nepali actors - mainly the Maoists - got carried away," he said.

Hindu allies

Observers believe that an important challenge for the Modi government will be cultivating an ally in Nepal.

There is no shortage of pro-Hindu organisations in Nepal, where 80 percent of people are Hindus and fundamentalist groups such as Shiva Sena Nepal that are linked to their Indian counterparts.

That Rastriya Prajatantra Party-Nepal, a pro-Hindu, pro-monarchy party and the fourth largest in the assembly, seeks to be Modi's ally is no secret in Kathmandu.

Kamal Thapa, its articulate chairman - who has been likened to Modi for his populist appeal - travelled to Gujarat to meet the BJP leader before he launched his election campaign.

In a picture taken in Gujarat's capital, Gandhinagar, and later posted by Thapa on his Twitter account, the two men can be seen exchanging gifts - a photo-op that has clearly bolstered Thapa's standing among Nepalis.

Thapa did not respond to Al Jazeera's calls seeking his comments, but Chandra Bahadur Gurung, the party’s general secretary said: "No foreign country should interfere in Nepal's internal matters."

"Nepal is a sovereign, independent nation but since 2006 foreign activities have increased. Foreigners should not interfere in our political affairs," he added.

Lokraj Baral of the Nepal Centre for Contemporary Studies agrees: "The crucial thing is whether foreign forces would be assertive when we are weak. Such a situation will make us submissive - we should stop being oriented towards a foreign country."