What is a Bear Market?

A bear market is a phase when stock prices fall 20% or more from recent highs and market sentiment turns pessimistic. It is part of every market cycle and typically caused by factors like inflation, recession fears, or geopolitical tensions.

In India, we’ve seen bear markets during:

• 2008 Financial Crisis

• COVID-19 Crash in 2020

• Global tightening cycles

Understanding the nature of bear markets helps you stay calm and focused instead of panicking.

Should You Invest in a Bear Market?

Yes – if done wisely.

Bear markets offer opportunities to:

• Buy quality stocks at discounted prices

• Rebalance your portfolio

• Start a Systematic Investment Plan (SIP)

• Learn discipline and long-term patience

Investing during market lows is where long-term wealth is built.

Expert Strategies to Manage Money During Bear Markets

1. Reassess Your Risk Tolerance

• Understand how much volatility you can truly handle

• Reduce exposure to highly speculative assets

2. Diversify Your Portfolio

• Don’t keep all your investments in equity

• Add:

  • Gold ETFs

  • Fixed Deposits

  • Bonds

  • Mutual Funds

3. Continue SIPs – Don’t Stop Them

• SIPs take advantage of lower NAVs

• They ensure rupee cost averaging

4. Build an Emergency Fund

• Keep at least 6 months of expenses in liquid funds

• Avoid redeeming long-term investments during panic

5. Invest in Defensive Sectors

• FMCG, Healthcare, Utilities often outperform during downturns

• Avoid cyclical sectors (auto, real estate)

6. Monitor but Don’t Obsess

• Check portfolio only weekly/monthly

• Stick to your plan and avoid emotional decisions

7. Revisit Goals

• Prioritize long-term goals (retirement, children’s education)

• Adjust short-term goals based on current liquidity

 Open a Free Demat Account with Upstox

Start your investing journey even in a downturn. Use expert guidance, secure platform and ZERO brokerage benefits.

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Steps to Open Free Demat Account via Upstox (2025)

Step 1: Visit the Website

• Go to Upstox Demat Account

Step 2: Enter Mobile Number & PAN

• Verify with OTP and proceed

Step 3: Upload Documents

• Aadhaar

• PAN

• Bank proof (cancelled cheque or statement)

• Selfie for verification

Step 4: E-sign Application

• Complete via Aadhaar OTP

Step 5: Start Investing!

• Explore SIPs, Stocks, Mutual Funds from one dashboard

Safe Investment Options During Bear Markets

Investment Type	Returns	Risk	Recommended For
Bank FDs	5-7%	Low	Retirees, Students
Debt Mutual Funds	6-8%	Low-Med	Conservative Investors
Gold ETFs	8-12%	Medium	Diversification
Index SIPs	12-14%*	Med-High	Long-Term Goal Seekers

*Based on past average; not guaranteed.

Mistakes to Avoid in Bear Markets

• Panic selling your long-term portfolio

• Investing in “cheap” penny stocks

• Ignoring asset allocation

• Using emergency fund to invest

• Taking loans to invest in stocks

Real-Life Case Study

Meet Ananya, a 28-year-old IT employee from Bengaluru. During the COVID crash in March 2020, she started SIPs in Nifty50 and Axis Bluechip Fund. Despite the crash, her SIP value doubled by end-2023 due to consistent investing.

Lesson: Fearful times create future profits.

FAQs: Managing Money in a Bear Market

Q1: What is the safest investment during a bear market?

A: Bank FDs, Debt mutual funds, and Gold ETFs are relatively safe.

Q2: Should I pause my SIP during a market fall?

A: No, it’s better to continue or even increase SIPs in a downturn.

Q3: What should beginners do during a market crash?

A: Avoid panic, start small SIPs, and build emergency fund.

Q4: How do I protect my portfolio?

A: Diversify, reduce risky assets, invest in defensive sectors.

Q5: Can I open a demat account now?

A: Yes! Open your free Upstox account here.