07 May 2015 19:34 IST

Bulls and Bears

Watch this video to know what these terms mean and how they affect the market and the economy

Stock market commentators in the print and electronic media tend to use a lot of animal metaphors, bulls and bears being some of the most common. A bullish market is one where investors are very optimistic, and are keen to buy shares and there are very few sellers, so the prices are constantly being pushed higher, and the market is in an upward move.

On the contrary, in a bear market, people are pessimistic about the prospects of companies, so stock prices are falling steadily and there are far fewer buyers than there are sellers.

In the video, Aarati Krishnan explains that stock prices often move in a very wide band, even within the trading day or trading session. But this doesn’t mean that bull and bear markets happen in the same day! By definition, a bear market is one where the benchmark index falls by 20 per cent or more over a period of two months or more. In a bull market, the reverse happens. It is one in which the indices trend upwards by 20 per cent or more, without a correction, for two months or more.

Watch the video to learn about the origin of the terms, and to know what cyclical and structural bear markets are.