Police have carried out a series of raids in and around Mumbai as the search for those behind Tuesday's train bombing which killed 183 continues.
The bombs exploded at the height of the rush-hour
As bomb squads combed the wrecked carriages, a leading militant group denied it was behind the attacks.
The blasts in compartments on seven trains also left 714 people injured.
Prime Minister Manmohan Singh will shortly address the nation.
Much of Mumbai's railways are working again, although many people used buses.
Bomb squads and sniffer dogs are combing the wrecked carriages where the seven co-ordinated blasts occurred.
Police say they have raided sites in the area and detained suspects for questioning, but made no arrests.
No-one has yet admitted carrying out the attacks. Security officials say it was a well planned operation masterminded by a major terrorist outfit.
Lashkar-e-Toiba, a leading Pakistan-based militant group fighting in Kashmir, rejected suggestions that it had been behind the attacks.
A spokesman for the group described the bombings as "inhuman" and "barbaric".
Many scoured hospitals for news of missing loved ones
A second group, Hizb-ul-Mujahideen, also condemned the blasts.
Mumbai, previously known as Bombay, is India's financial capital and the near-simultaneous explosions happened at the height of the evening rush-hour.
More than 12 hours later, many people were still frantically searching for relatives, travelling from hospital to hospital for news of the injured.
A spokesman for the chief minister's office told the BBC that 127 bodies had been identified by Wednesday morning.
"Doctors are still working, there are operations going on, there are amputations going on, a lot of people have suffered multiple injuries," Anumeha Yadav, a reporter for the Indian Express, told the BBC's World Today programme.
The blasts all happened in fast trains and in or near first-class carriages on the Western Railway, one of Mumbai's three main train networks.
The city's suburban train system is one of the busiest in the world, carrying more than six million commuters a day.
As services resumed on Wednesday, some commuters preferred to travel to work by road instead of taking the train service.
Rescuers struggled to pull the victims from the wreckage
"I am too terrified after yesterday's incident. My friend's father was injured in one of the explosions. I couldn't muster up the courage to take the train to work today," a commuter, Venuka Bharadwaj told the BBC.
In the immediate aftermath of the blasts the city's entire rail network was shut down, stranding hundreds of thousands of people in the city overnight.
Many stayed at the homes of relatives or were put up in schools and colleges.
Appeal for calm
Security has been increased in Mumbai and other Indian cities.
Prime Minister Manmohan Singh has appealed for people to "remain calm, not to believe rumours, and carry on their activity normally".
BBC Asia analyst Jill McGivering says the government's immediate focus may be more on keeping stability than on apportioning blame, as Mumbai is a city where violence can quickly spark counter-violence.
Police said the co-ordinated explosions took place at or near Matunga, Bandra, Khar, Mahim, Jogeshwari, Borivili and Mira Road stations, with most on moving trains.
The first blast went off at about 1820 local time (1250 GMT). Correspondents spoke of scenes of pandemonium, with people jumping from trains and bodies flung onto tracks.
An eyewitness at Mahim told the BBC some of those who had jumped from the train were run over by another train coming in the opposite direction.
The Indian railway minister, Laloo Prasad Yadav, has announced financial help for the victims and their relatives. He said relatives of those killed will get 500,000 rupees ($11,000) each.
He has promised jobs for the victims' relatives and said the railways would also bear treatment costs for the injured.
The attacks are the worst in the city for more than a decade. More than 250 people died in a string of blasts in the city in 1993.
Analysts say Mumbai has been a repeated target because it is a financial hub and a centre for the underworld.