What is a Bull Market and a Bear Market?
You will hear these two words constantly once you start following markets. Understanding them — and knowing how to behave in each — separates calm investors from panicked ones.
Key takeaways
Bull market — when everything is rising
A bull market is a period when stock prices are generally rising. Investor confidence is high, the economy is doing well, companies are reporting good profits, and people are eager to invest. The market keeps climbing over weeks, months, or even years. The term comes from the way a bull attacks — thrusting its horns upward. In India, the period from 2014 to 2018 was largely a bull market. The post-COVID recovery from 2020 to 2021 was one of the sharpest bull runs in Indian market history, with the Nifty almost doubling in 12 months.
Bear market — when everything is falling
A bear market is the opposite — a period when stock prices are falling broadly, usually defined as a drop of 20% or more from recent highs. Investor sentiment turns negative, people start selling out of fear, and the market keeps declining. The term comes from a bear swiping its paws downward. The 2008 global financial crisis was a prolonged bear market. The COVID crash in March 2020, when the Nifty fell nearly 40% in just a few weeks, was a swift and severe bear market — though it recovered unusually fast.
How should you behave in a bull market?
In a bull market, the temptation is to invest more aggressively because everything seems to be going up. This is actually when you should be more careful — valuations get stretched, risky assets look attractive, and the risk of a correction increases. Continue your SIPs, avoid borrowing money to invest, and do not abandon your asset allocation just because markets are running hot.
How should you behave in a bear market?
In a bear market, fear takes over and people want to sell everything and stop their SIPs. This is historically the worst time to sell — and often the best time to keep investing steadily. When markets fall, your SIP buys more units at lower prices through rupee cost averaging. The investors who build real wealth are the ones who stay disciplined in both — not chasing the bull, not running from the bear.