- Date : 13/08/2023
- Read: 3 mins
Improve your understanding of stock market operations beyond the retail investing perspective. Know the difference between bulk and block deals and their impact on retail investors, if any.
The direction of the moolah may tell it all! When investment banks, mutual funds, hedge funds, pension funds, foreign institutional investors (FIIs), high net worth individuals (HNIs), and company promoters invest money in the stock market, they can have a significant impact on the movement of stock prices. Such institutions transact in bulk and block deals. However, there is a difference between a bulk deal and a block deal and we will analyse it in this article.
- Real-time details of block deals are not visible to investors, whereas bulk deals are
- For a bulk deal, the transaction needs to account for at least 0.5% of the total shares of the company
- Block deals require a minimum of 5,00,000 shares or Rs. 10 crores in value
- Retail investors should not solely depend on these deals for investing decisions
What is a Block deal in the share market?
A block deal is a single transaction involving a minimum of 5,00,000 shares or an equivalent value of at least Rs.10 Crores. Block deals take place in block deal windows and not during the standard trading hours of 9:15 AM to 3:30 PM. Hence, retail investors do not know of these deals.
The morning window - 8:45 AM to 9:00 AM
The afternoon window - 2:05 PM to 2:20 PM.
The block reference point used for placing orders is calculated differently for both trading windows. In a block deal, institutions and other investors can place orders at a premium or discount of 1% (+ or -) to the block reference price.
All deals which are not executed or not matched stand canceled.
What is a bulk deal in the share market?
Transactions involving at least 0.5% of a company's total listed shares are called bulk deals. These deals are not confined to a special trading window and occur during regular trading hours. They are visible to all market participants, including retail investors, with the volume traded displayed on price charts on trading platforms and websites.
Since such deals have a real-time impact on market prices, the broker facilitating such transactions must inform the stock exchanges about the details of such transactions.
However, it is worth noting that a bulk deal is executable within the block deal trading windows if the value of the 0.5% of shares traded exceeds Rs. 10 crores.
Though bulk and block deals are done by investors having possible privileged knowledge, a wise retail investor will not make investment decisions based on these deals and conduct further research.
Disclaimer: This article is intended for general information purposes only and should not be construed as investment or tax or legal advice. You should separately obtain independent advice when making decisions in these areas.
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