What is Bull Market?

A bull market is a period when stock prices are rising, and market sentiment is positive. It typically occurs when a major market index increases by 20% or more over a sustained period, often lasting months or even years.

Simply put, bull market is the optimistic market period when price of most things are taking the upward direction. 

But the question is – why is it called a “bull market”?

Well, as investors believe, in bullish phase of stock market, the bull charges forward with bouncing the prices up with its horns. So when the market is doing well and the prices go up, it is exactly similar to bull taking the charge of market.

So what happens in bull market?

Well, it’s like a happy period of stock world where investor feel strongly confident and positive about the economies and financial markets. A bull market can last from months to years and can be seen in many assets such as real estate, bonds, stocks, gold, etc.

Key Features of a Bull Market

Let’s take a look at some key features of a bull market:

• Rising Prices: The price of stocks most commonly go up during the bull market over time. 
• Optimistic Investors: In this phase, most investors feel confident about the future which results in more active trading.
• Economic Growth: Both economy and bull market are interconnected. Since investors feel confidence in economy, businesses grow and people spend more money.
• Rise in Demand: Higher market confidence of investor lead to more people entering or buying stocks, causing price even go higher. 
• Long Duration: A bull market is not a weekly or daily thing, but lasts for months or even years.

Fact Time: After the Global Crisis of 2008-2009, the market saw the longest bull bounce of over 11 years till March 2020.

Also Read: Bear Market

How Bull Markets Begin:

If carefully noticed, investors can detect every bull phase with certain market stages such as;

Recession Recovery: When the market recovers from an economic downturn or recession, the businesses grow, hinting the thumps of bull again.

Interest Rates: Lower interest rates lead to rising number of stock investments since borrowing becomes cheaper.

Government Policies: If state’s policies are more lenient or favourable to investors, it encourages investment and economic growth.

Risks In Bull Market:

Over-Confidence: Evident enough, during bull phase of market investors feel confident. But most confident situations often lead to risky choices, causing the wrong investment decisions or interpretation of stock rises.

Over-Valuation: When see rising from the bullish lens, sometimes prices can go beyond their real value. It can cause situation of market correction (a paw of bear) or worst case scenario – market Crash.

Example: In India, between 2014 and 2017, the Indian stock market saw a bull market where indices like the Sensex and Nifty 50 reached new highs, fueled by strong economic growth, government reforms, and low interest rates.