Introduction
The terms ‘bull’ and ‘bear’ reflect the nature of stock market and are derived from the attacking nature of those representative animals. A bull always attack by thrusting its horns up into the air whereas a bear attack by slapping down its claws. Therefore, a bullish trend, in simplest term, is when market is performing and rising.
A bullish trend is a nature or a characteristics of a stock market where the market is reflecting the upward trend. Also, investors and participants are expecting the price of one or more securities/stocks to rise.
A bullish trend also indicates increase in market confidence and recovery of economy. Bullish trend is optimistic about the rising price of the stock and market going up. Bull market reflects the expansion phase of a business cycle.
Characteristics of a Bullish Trend
- Investors buy more stocks
As bullish trend is upward and stock prices are rising. Therefore, investors buy more stocks as they perceive that the prices will keep increasing. the investors are confident in the market and expect market is heading to a strong position. They fully assure their decision of buying more stocks making the market bullish.
- Supply and Demand of securities
In bullish market, one can observe strong demand and weak supply of stocks. As, investors have confidence in market and expect market to grow, more and more investors invest. There are more buyer i.e. demand is high and this demand and supply adjust the higher price of stock.
- Increase in IPO activity
In bullish trend, investors are confident and positive towards investment in stock market. Due to this reason, companies prefer issuing IPOs in bullish market as there are more investors willing to invest and experiment i.e. there is a healthy demand of equity. In January to March 2021, Indian stock market recorded 22 IPOs worth $2.5 billion.
- Positive impact on GDP
In bullish situation, investors will have more wealth and they are confident in the market. Thy are more into economic activities by spending their benefits. Similarly, for businesses, they can raise money from the investor easily and spend it on capital assets that help business expand and grow. This spending pattern assist in boosting the GDP.
- Inflation
As everything in bull situation is trending upward, there is a chance of inflation. As market is optimistic, there is high demand as people are spending. Hence, the prices of commodity are also likely to rise, causing inflation.