Bears and bulls are typical stock market animal metaphors, but precisely how is an animal related to stocks? Consider how each creature assaults its prey: a bull normally raises its horns forward, whereas a bear typically lowers its head. In the similar way, when the market is attacked in a downward motion, it is known as a Bear market.
A bear market occurs when the stock market's price falls for an extended period of time. In other terms, a bear market is defined as a long-term tendency of dropping stock prices. For a market to be categorised as bearish, it must have seen a significant decline of at least 20%. It's characterised by a drop in speculative demand among residents, which reduces the capital sector's overall cash flow.
Bear markets may precede a broader economic downturn, which is terrible for everyone. These markets can endure anywhere from a few weeks to several years, with the average being around 18 months. Bear markets have lasted up to 5 years in the worst-case scenarios.
The post-Covid bull rise has been halted by ballooning inflation, rising interest rates, and the Russia-Ukraine war, which has put immense pressure on stock markets around the world.
The S&P 500 index, which has a market cap of almost $38 trillion, is already in bear market territory, and the benchmark Nifty 50 and Sensex are dangerously close.