Capital Market Nigeria

A combination of several factors starts a bull market. These include turn-around in the economy or recovery form recession, reduction in interest rates that eases credit and improves liquidity in the system, increase in inflation, impressive corporate performances and benefits declaration, favourable changes in government policies / regulations, to mention a few.

Generally, factors that effect upward stock price movement tend to initiate a bullish market in stock market. A trader / investor should invest when a bull market is imminent in order to generate huge gains. Therefore, to get the maximum benefit from a bull market, a trader/ investors should analyse and identify the potential leaders, most especially, blue chip companies with sound fundamentals and good prospects because they are usually the first to enjoy the stock rise. These stocks usually have a very strong and positive correlation with the stock market.

Recognising Bullish Signs: The following are some of the probable signs that may usher in a bullish market regime.

1 Decreasing interest rate.

2 High Inflation.

3 Emergence of bargain price because of excessive pessimism.

4 High level of cash in circulation.

5 Few significant price declining.

6 Decreasing flow of primary market activities (new issues can adversely affect the secondary market’s supply / demand balance).

7 More buyers than sellers.

8 Accumulation taking place as indicated by high volume on up days and low volume on down days.

Net Asset per share (NAPS) at above stock market price.