Bulk and Block Deals

List of Bulk and Block deals reported to the BSE and NSE at the end of the day by the members. These are large transactions by promoters, mutual funds, financial institutions, insurance companies, banks, venture capitalists and foreign institutional investors.

Block deals happen during a specified interval in the morning while Bulk deals can happen throughout the day.

BULK AND BLOCK DEALS

A Brief Introduction:

The stock market is vibrant and dynamic, where stocks of publicly listed companies are bought and sold by individuals or institutions. It is mainly operated by two types of participants, as mentioned previously, the latter being the ones majorly impacting the market through Bulk and Block deals. It is only natural that these big market players in the investment banks, hedge funds, fund houses, and high net worth individuals are the ones that are participating in bulk as well as block deals. This is mainly because they have more detailed information about companies and the market. They have heavy investments in several sectors according to their diversified portfolios and thus have the tools and methods to know about the inner ongoings of the market. They might obtain information quicker or expect the company to go in a certain direction in the market. Therefore, they engage in these deals more often and dictate the movements of a few retail investors.

Understanding Bulk Deals in-depth:

So, what exactly are Bulk deals? Bulk deals can be recognized as transactions involving at least 0.5% of the total listed shares of a company. Bulk deals can occur during any hour of the trading day. These deals are visible to everyone and are updated on the stock market, as the broker who conducts or manages the deal is responsible for intimating the stock exchanges about the deal with all its related details. After the information is duly shared with the exchanges, they must also share it with the public. According to the regulations, this is usually done after the closing of trading hours on the same day.

Looking at Block Deals exhaustively:

Now, what are Block deals? Block deals happen as a single-time trade, where the participant buys or sells shares greater than 5,00,000 in number or worth more than 10 crores rupees. It used to be 5 crores rupees until 2017, after which the Securities and Exchange Board of India raised it to 10 crores. Now, unlike the bulk deals, there is a block deal window during which the block trades can be conducted. As these deals happen in a separate trading window, they aren't visible to normal day traders.

There are certain rules that exercise control over block deals. They are:

  1. These deals must not be conducted during normal trading hours but during a special trading window. This window operates in two shifts of 15 minutes each. The morning session is valid between 8:45 AM to 9:00 AM and the afternoon session is valid between 2:05 PM to 2:20 PM.
  2. Block deals are compulsorily made in accordance with the Block Reference Price (BRP), where the orders are to be placed only in the range of +/-1% of the BRP. It is computed separately for both sessions.
  3. If a block deal order placed in the morning window could not be matched, it is canceled and not carried forward to the afternoon window. The parties involved in the trading must agree to buy/sell at an agreed price. They also need to trade completely and not in installments

Who all participates in these deals?

The participants in these deals are huge market players. They can be institutional investors, both foreign and native, such as banks, hedge funds, venture capitalists, fund houses, large companies, etc. They may also include high-net-worth individuals.

We won't find retail investors or day traders getting involved in these deals. They simply do not have the means and the knowledge that the big market players have and hence may miss out. They can quickly follow the dictation upon the conclusion of the deals.

What is their relevance to the share market?

Why are these deals important in the stock market? Well, SEBI came up with the idea to ensure greater transparency when it came to high-volume deals. They wanted the investors to be fully aware of the massive changes in the stock market and disclose them quickly. These deals hence explain the "why and how" aspect of mammoth changes in the market.

What impact do they create in the share market?

The most important thing that these deals tell us is the attraction or repulsion that a stock generates in the market at that time. It gives the crowd a glimpse of what is happening behind the scenes and what direction the stock is likely to take. A few of these deals may not be that indicative of certain movements. However, if there are recurrent transactions taking place in a direction, then it certainly indicates something.

Frequently Asked Questions

1. What is the block reference price?

It is basically a marker that dictates where the block deals must happen. It is the volume-weighted average price of the stocks concerned during the sessions. Block deals need to take place in the range of +/-1% of the BRP.

2. How does the MarketSmith Screen work?

The stock screen will showcase all the Bulk and Block deals that were reported to the BSE and NSE at the end of the day. Here, you can browse through all the deals, and can also easily filter specific segments to facilitate finding the desired stocks. Moreover, you can filter it according to company, type, exchange, and transaction. Furthermore, the viewers will be able to view tabular information categorized into three primary columns: date, company name, and client name.

3. What do you mean by Block Deal in the Stock Market?

Block deal consists of trading a minimum quantity of five lakh shares or a minimum value of 10 crores in a single transaction. This is carried out on a special “ Block Deal Window”. This trade is not visible to the people trading in the normal trade window.

4. What do you mean by Bulk Deal in the Stock Market?

Here, the total trade quantity bought or sold is always more than 0.5% of the number of equity shares of the company. This trade is visible to everyone unlike Block Deals and can happen anytime within the market hours.

5. How can you identify a bulk deal?

Here, the total trade quantity bought or sold is always more than 0.5% of the number of equity shares of the company. This trade is visible to everyone unlike Block Deals and can happen anytime within the market hours.

6. What impact does the Bulk deal have on stock prices?

When you consider bulk deals on the NSE and BSE for a period of time and view the impact it has on the stock price, you realize that wherever there is a concentration of interest, there will be a positive impact on the prices.