The following are the three phases of Market :
- Bull Market
- Bear Market
- Range-Bound Market
Bull Market
In bull market, we can assume that the future price of the market can rise and the investor’s would start investing in it to avail the benefit of the bull market. Generally, bull run comes after the bear market. Growth of 20% or more in stock indices is considered as bull market.
Causes of Bull Market
- A strong foundation of economy
- Consumer Confidence
- Excellent performance of large cap companies
Bear Market
Bearish market is a market where we can assume that the future price of the market can fall down and investors would start exiting from the market. Down fall of 20% or more in index can be assumed as bear market.
Causes of Bear Market
- Weak or slowing economy ( Sri Lanka economic crisis )
- Bursting market bubble ( DOT COM crash of 2000)
- Wars( Ukraine Russia war )
- Geopolitical crises ( India’s border issue with China )
- Global health crisis ( COVID 19 )
Range-Bound Market
A range-bound market is one in which price bounces between a specific high price and a low price. The higher price is called Resistance whereas the lower price is called support. When the resistance is broken, we assume that the market has become bullish whereas when support is broken, we assume that the market has become bearish. The market movement could be classified as sideways.
Investor view 