Spain's stock and bond prices may initially react positively to the vote because Rajoy is seen as market friendly and pro-business.
Rajoy, who will not be sworn in until around Dec. 20, will not get much breathing space.
The nation's borrowing costs are at their highest since the euro zone was formed and yields on 10-year bonds soared last week to close to 7 percent, a level that forced other countries like Portugal and Greece to seek international bail-outs.
The Spanish Treasury heads back to the markets with debt auctions on Tuesday and Thursday this week, which will test confidence in Rajoy's pending leadership
"The fact the PP has won by a large majority is a very good sign for the markets. It means stability," said Teresa Sabada, professor of political communication at IESE business school in Madrid.
"The best scenario now would be for Spain to announce some new emergency austerity measures but I am not sure whether this will happen or not."
Economic gloom dominated the election campaign, with more than 40 percent of young Spaniards unable to find work and a million people at risk of losing their homes to the banks.
"Being a civil servant I'm not optimistic," said Jose Vazquez, 45, after he voted in Madrid.
"We can choose the sauce they will cook us in, but we're still going to be cooked."