Bear and Bull Markets
- 13 Mar 2020
- 1 min read
Why in News
Recently, the many Indian indices including NSE Nifty index have entered into ‘bear market’ territory in the backdrop of the declaration of the coronavirus outbreak a pandemic by the World Health Organisation (WHO).
- A bear market refers to the market where share prices are continuously declining.
- Its downward trend makes investors believe that the trend will continue, which, in turn, perpetuates the downward spiral.
- It is considered riskier to invest in a bear market, as many equities lose value. Thus, most investors withdraw their money from the markets.
- During a bear market, the economy slows down and unemployment rises as companies begin laying off workers.
- A bull market refers to a market that experiences a sustained increase in market share prices.
- It ensures investors that the uptrend will continue over the long term.
- It signifies that the country's economy is strong and employment levels are high.