Mr Sharma held Wentworth by on margin of 1.3 per cent but faced a strong grassroots campaign by Ms Spender, a well-known local business leader and renewable energy advocate.
At 11.30pm on Saturday Ms Spender held just under 56 per cent of the two party vote.Â
However, while describing the evening as a win for the community she did not formally declare victory, saying there was still polling and pre-polling to count.
"While the numbers are looking really good nothing is certain," she told supporters at the Bondi Bowling Club.
"Thankyou all for coming tonight and being on this journey ... it has been absolutely incredible", she said to cheers from the crowd.
"It started just over two months ago and it's incredible how far we've come.
"To so many of you standing in this room tonight, thanks you so much."
She said her strong vote in the blue-ribbon seat as representing "calling time" on negativity and spin in politics.
The seat was one of several in NSW with high numbers of disaffected Liberal voters facing challenges from so-called "teal" candidates.
Liberal MP Trent Zimmerman looks set to lose his seat of North Sydney to independent Kylea Tink, while his colleague Jason Falinski trails another teal candidate in Sophie Scamps.
But Labor is also facing a shock defeat in the western Sydney seat of Fowler, where star candidate Kristina Keneally could fail in her attempt to move to the lower house.
Independent Dai Le has a comfortable 54-54 lead over the former senator, who faced criticism after being parachuted into the once safe Labor seat.
