BULL MARKET

Presented By : - Vinisha
Ingle

Mohan Raj Mani

What is a bull market ?

A prolonged period in which investment prices rise faster than their historical average. Bull markets can happen as a result of an economic recovery, an economic boom, or investor psychology. A bull market is associated with increasing investor confidence, and increased investing in anticipation of future price increases capital gains. A bullish trend in the stock market often begins before the general economy shows clear signs of recovery.

Example of Bull Market

India's

Bombay Stock Exchange Index, SENSEX, was in a bull market trend for about five years from April 2003 to January 2008 as it increased from 2,900 points to 21,000 points. Notable bull markets marked the 1925-1929, 19531957 and the 19931997 periods when the U.S. and many other stock markets rose

History
The terms "bull" and "bear" sometimes are said to have become associated with business and accounting because of the way bulls attack enemies with an upward motion with their horns and the way bears attack enemies with a downward swipe of their paws. However, as explained by the GreekShares website, the terms actually come from trading and entertainment habits. Fur traders used to sell the skins of bears they had not yet caught. Later, people bought shares they didn't yet own, purchasing the shares after a price drop and then delivering them. Because their activity mimicked the activity of the fur traders, their habits were described as "bear." Similarly, bull and bear baiting were once popular sports. Because people pitted bears and bulls against each other, rising prices became associated with the opposite of a bear market and thus fell

Basis of Bull Market

As all the operations in the Bull Market take place on the basis of price rise or expectation of price rise, the Bull Market is essentially characterized by optimism, investors confidence on market trends and by the expectation that the price level will continue to rise. So, the Bull Market is primarily based on the investors belief that the upward trend of price levels will continue in the long term. Bull Market signifies that the economy of the country is strong and suggests high level of employment.

Existence Period of Bull Market

No Bull Market can continue to exist for a very long period, as the prices cannot rise infinitely. After a certain point prices has to go down. The Bull Markets lasts generally for a few months and in these months high volume of trading takes place in Bull Market. In the Bull Market, Bull is the investor who expects price level to rise and buys a type of security or commodity in hope of earning high profit by reselling it in the future when the price rise will take place.

Characteristics of Bull Market

Strong

Economic Growth As said above, strong economic growth are the main reasons for a bull market. Investors would dare and buy stocks heavily only when the overall economic scenario is extremely positive. The financial condition of companies greatly improves in a growing economy and this reflects in the share price, causing it to go up. If the economic growth data is positive along with increased exports, then this may be the reason for a bull market.

Characteristics of Bull Market (Contd.)

Economic

Recovery after a Long Time While we study what is a bull market, knowing its characteristics is important, and economic recovery after a long time is definitely one of them. The economies of most nations in Europe were in a economic recession and there was no growth two years ago. However, later on, the situation improved and this leads to the start of such a. From the lows formed two years ago, global markets have moved up sharply and many investors who bought stocks at lower levels got huge profits in this bull run.

Characteristics of Bull Market (Contd.)

Strong

Investor Confidence Strong investor confidence and heavy buying is also a main reason for a bull run in the stock markets. Stock prices can go up only if the stocks are bought in huge volumes. In every bull run in stock markets, it has been observed that the participation of domestic or retail investors is important, along with the participation of institutional investors.

Characteristics of Bull Market (Contd.)

Good

Financial Results Better financial results have always been the driver for stock prices across the world. Stocks of companies posting good quarterly and yearly results have always shown an upward trend. If all companies are able to post good results, then the broader markets react sharply and move upwards. This itself is the sign of a bull market.

Characteristics of Bull Market (Contd.)

Rising

Foreign Investments Rising foreign investments in stock markets can also be the cause of a bull market. Foreign investments by mutual fund companies, large equity funds and wealthy individual investors can raise the stock prices much beyond the true or just valuations. So, if you are stock trading in such a market, then keeping an eye on foreign investments is a must.

Significance of Bull market

Every business is part of the larger economy in which it operates. When prices rise and a bull market exists, the economy usually is healthy, and people have enough money to support a business through the purchase of goods and services. When a company's recognizes a bull market within the business or the general sector in which the business exists, it is a sign that the company is performing good but it should take the necessary step to sustain such position.

What to do in Bull Market?

The first thing you need to observe is that whether the appreciation in stock prices is as per the fundamentals and valuations or not. Many times, stocks of companies not performing well too go up due to an overall positive trend in the stock markets. In case of any problems, these stock prices will come crashing down causing heavy losses. So, in a bull market, it is important that you buy stocks of well performing companies only. Investing in stocks can be complicated for beginners and hence seeking help from experienced people is a good idea. A bull market can be the best time to lock your profits and bring home the money before any significant correction lowers the stock prices considerably. Avoid referring to newspaper and other suggestions.