Investor Sentiment In The Stock Market


Investor sentiments influence the stock markets in nations where investors are more prone to herd-like behavior and overreaction more prominently. Stock markets are also prominently affected by investor sentiments in countries with inadequate institutional involvement.


The Indian stock markets are more volatile during this period of ongoing pandemic era. The slowdown in global production and consumption hit the investors’ confidence in the market. However, the market bounced back, and online Demat accounts number increased with top brokerages in line with the global trend of work from home. There is a significant increase in the number of individual investors in the stock market. Monthly average of demat account opening was around 4 lakh in the year 2020. It increased to a monthly average of about 29 lakh in November 2021. It is a seven times growth in the monthly average from the coronavirus trigger. More than 75% of new entrants in the market are under-30 investors.

If you are uneasy with the negative buzz of a plunge in markets, leave it behind and take advantage of an opportune time to invest in stocks owing to general sentiment but hold high potential. You can start investing with one or two blue-chip stocks with strong fundamentals that have offered significant returns. Look for a SEBI-registered stockbroker to open trading account online.

Bearish vs. Bullish Sentiment in the Stock Market

The collective opinion toward the stock market is called Bearish or bullish sentiment. Investor sentiments, besides economic cycles, are the crucial driver of bear/bull markets.


     The bullish sentiment indicates most investors think of a rise in stock prices. On the contrary, bearish sentiment represents investors believing the stock prices will decrease.

     A bullish investor thinks that a particular security or asset price in a specific sector will increase. It can be a share, bond, commodity, currency, or other assets. Bullish investors think that the stock market is due to rise, anticipating general profits.

     More investors are interested in buying stock than selling during a bullish market. They prefer to take long positions and buy a financial instrument that is likely to be appreciated.

      A long-term bullish investor considers overall market conditions.

      A short-term trader considers current impactful news related to the company, such as quarterly revenues, global economy, mergers, right issues, new deals, etc.


On the other hand, a bearish investor thinks of a declined industry or stock or asset or the market.

     On the other hand, bearish traders want to take short positions to gain from short-term fluctuations if the market is about to decline. A bear market can give a good experience if you know the technique to be adaptive to changing setups. Only adaptable traders can be successful with the necessary strategies to trade bears.

      Bonds and defensive stocks are the most preferred securities in a bear market.

      Short selling is also considered by experienced traders when the market is weak.

Thus, most investors love to capitalise on the bullish market, but experienced ones that are adaptive to changes can be benefited from the bearish markets as well.

Indicators to Bullish and Bearish Markets

Bullish indicators include:

     Most equities tend to rally and show strength with huge volume.

     52-week highs

     Significantly colossal volume

     Wondrous news

Bearish indicators include:

     Weak stocks tend to have a bearish market. You may find sudden super high prices but due to a pullback or most stocks open at high in the opening hour but close lower.

     52-week lows

     Significant decrease in trading volume

These indicators can help you determine if a stock is bullish or bearish. It is a task that requires much effort to identify a bearish stock market and its time frame. You can learn more about online trading as you keep investing in the stock market. 

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