MUMBAI, May 2 (Reuters) - Investors do not expect

India's national elections to spark major volatility in the

country's stock market, unlike prior occasions, based on the low

cost of insuring against a slide if Prime Minister Narendra Modi

does not win a third straight term.

The Nifty 50, India's main equity gauge, is trading

at record-high levels amid surveys predicting Modi's Bharatiya

Janata Party (BJP) will emerge victorious in the elections that

started on April 19 and runs through June 4, when results are

due.

A month before that, the implied volatility of a put option

with a strike price that is 10% below the current level of the

Nifty 50 Index is at 18%-20% on the National Stock Exchange.

At this time in 2019, the implied volatility was 28%-30%,

suggesting an investor had to pay much more to protect against

an unexpected outcome -- a BJP loss -- that year.

Implied volatility is a key variable in options pricing. A

lower number indicates investors are relatively more confident

about the outcome of an event.

"I think there's a high level of confidence that there will

be stability in the Prime Minister's office post the results

declaration," said Vikas Pershad, Asian equities portfolio

manager at M&G Investments.

"The depressed volatility ... to an extent, reflects

complacency about the results. This time, it's the least event

risk that we have felt in 20 years."

M&G manages nearly $400 billion in assets, per its website.

While opinion polls predict a BJP victory, they aren't

always accurate, like in 2004.

That year, the BJP's unexpected loss to the Indian National

Congress and its coalition partners sent the Nifty 50 plunging

as much as 18%.

"A change of guard (this year) could lead to a correction in

the short term, similar to what we saw in 2004," Frank Benzimra,

head of Asia equity strategy at Societe Generale, said in a

note.

But right now, foreign investors are less worried about the

outcome of the elections and more concerned about India's

relatively expensive stock market, he said.

The question, currently, is not if the BJP wins but the

margin of victory. Opinion polls indicate the party and its

allies will win more than 300 seats, comfortably higher than the

272 required for Modi's return.

"I think if there were a number less materially less than

300, then that would be a huge shock to the market," said M&G's

Pershad.