Indian stocks volatility index shows election fears

The National Stock Exchange's India Volatility Index , which measures the expectation of near-term volatility based on index option pricing, has jumped 22.3 percent so far in May, while the more widely known U.S. CBOE Volatility Index .VIX eased 8.4 percent this month up to Thursday.

The Indian stock market has recovered about 50 percent of its value from 2009 lows hit in early March, swept up by a wave of investor optimism on increasing confidence the global economy is on the mend.

But political uncertainties could play spoilsport if month-long national elections produce a fractured mandate when results are released on May 16.

"We are facing an event that the world is not facing, and that is fuelling the volatility," Hemant Thukral, vice president at Asian Markets Securities, said. "Things will continue to be erratic in the near term because the event is so big."

The world's largest democracy went to polls last month, with the ruling centre-left Congress party coalition seen having a faint edge over a rival group led by Hindu-nationalist Bharatiya Janata Party (BJP).