The names "bear" and "bull market" come from how these creatures go after their prey. The paws of a bear are swiped downward, while the horns of a bull are thrust upward. These actions represent the movement of the market. In contrast to a bear market, which happens when the economy is contracting and most equities are losing value, a bull market arises when the economy is expanding.
A Bear Market Is What?
• A bear market is one in which stock prices keep dropping.
• Investors believe the trend will continue because of its downward trajectory, which feeds the downward spiral.
• A bear market makes investing risky since many stocks lose value. The bulk of investors have pulled their money out of the markets as a result.
• In a bear market, businesses slash personnel, which slows down economic growth and increases unemployment.
What Is A Bull Market?
• A bull market is one where prices for market shares climb steadily over a protracted period of time.
• Investors are given the reassurance that the increasing trend will endure over time.
• It indicates that the country has a strong economy and high employment rates.
Example Of Bull And Bear Markets In India
• The Indian Bombay Stock Exchange Index saw a bull market trend from April 2003 to January 2008, climbing from 2,900 points to 21,000 points.
• Examples of bear markets in India include the stock market crashes of 1992 and 1994, the dot-com disaster of 2000, and the financial crisis of 2008.
• Additionally, a well-known example of a bear market in the United States is the Great Depression of the 1930s.
Bear Market And Bull Market Traits:
Securities Market Supply and Demand
• In a bull market, there is a high demand for securities and a small supply. To put it another way, a large number of investors are interested in purchasing assets, but very few are looking to sell them.
• Share prices will increase as a result of the heightened competition for available shares.
• On the other side, in a bear market, there are more sellers than buyers. Share prices decrease as a result of the huge difference between supply and demand.
• Because market activity is influenced and determined by how people perceive and respond to it, investor psychology and mood have an impact on whether the market rises or falls.
• Finally, the collapse of the stock market has destroyed investor confidence. As a result, investors start to pull their money out of the market, which lowers prices overall as the outflow increases.
• In a bear market, investors start to transfer their funds away from equities and towards fixed-income securities while they wait for the stock market to rebound.
• In a bull market, investors voluntarily participate in the expectation of profit.
• Stock market performance and investor psychology are interwoven.
Economic Activity Variations
• Since the companies whose stocks trade on the exchanges are also involved in the greater economy, the stock market and the economy are intimately linked.
• A bear market is associated with a slow economy. The majority of firms are unable to generate big profits since consumers are not spending nearly enough. The stock market's valuation of individual stocks is directly impacted by this decline in profitability.
• On the contrary, this occurs in a bull market. People are eager to spend their increased financial resources. As a result, the economy is boosted and strengthened.
Circuit breakers are set off to stop markets from crashing, which happens when investors sell their stocks out of panic because they think they are overvalued. This stops the investors from suffering too many losses quickly.