Nifty Sinks Below 24,000, Brent Crude Tops $120: Should Investors Sell in May or Adopt a 'Buy the Dip' Strategy?

Equity Indices Extend Losses Amid Weak Global Cues

The benchmark equity indices settled lower on Thursday, extending losses amid weak global cues, though late buying in select heavyweights helped pare early declines. The Nifty slipped 180.10 points or 0.74 percent to close at 23,997.55 after opening on a weak note and remaining under pressure in early trade. The index, however, recovered some ground in the latter half of the session.

Sensex Declines 582.86 Points

The Sensex declined 582.86 points or 0.75 percent to settle at 76,913.50. During the day, it had dropped 1,237.5 points or 1.59 percent to 76,258.86 before trimming losses.

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Oil Prices Surge Amid US-Iran Talks Impasse

The price of Brent crude oil briefly surged past USD 126 a barrel early Thursday as stalled US-Iran talks raised doubts over the reopening of the Strait of Hormuz and a permanent end to the Iran war. Brent crude to be delivered in June jumped 3.3 percent to USD 121.90 after briefly soaring past USD 126 per barrel. Brent to be delivered in July rose 1.4 percent to USD 112.02.

Market Participants Caution Against "Sell in May" Strategy

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The recent volatility has revived the debate around the market adage "sell in May and go away", which suggests that investors exit equities during the May-to-October period due to historically weaker returns and re-enter later in the year. Market participants, however, caution that the strategy is not consistently reliable and may result in missed opportunities. Analysts said a "buy on dips" approach may be more appropriate in the current scenario.

Support Levels and Buying Opportunities

Ruchit Jain of Motilal Oswal Financial Services noted that Indian equities have formed a higher low, indicating a positive divergence typically seen near the end of a downtrend. He believes the price-wise correction may remain limited from here, with the 23,600–23,500 zone being a strong support. Investors should consider buying on dips in May.

Market Sentiment Supported by Earnings Season and Iran Ceasefire

Indian equities partially recovered in April after a steep decline in March. The Nifty and Sensex gained 7.5 percent and 6.9 percent, respectively, during the month, marking their best performance since December 2023 and offsetting part of the over 11 percent fall recorded in March. Ajit Mishra, SVP – Research at Religare Broking, advised investors to remain selective in the current environment, citing factors such as a break below 23,800 could trigger further downside towards 23,500 or lower, with major support placed at 23,100.

Markets to Remain Closed on Friday

Indian markets will remain closed on Friday for a holiday and resume trading on Monday, May 4.