What Are Block / Bulk Deals?
Essentially, the stock market is pushed by the forces of institutional investors and retail investors. Participants can trade in a large quantity of shares. Both these participants take their trading decision based on their technical and fundamental knowledge. Block Deals and Bulk Deals; these two terms can be similar but you need to understand the difference between them. In simple terms, when a large amount of quantity is traded, it is termed as block deal or bulk deal.
What is a block deal?
A block deal involves a transaction of minimum quantity of 500,000 shares or you can say a transaction with a minimum value of Rs 5 Crore. This deal takes place for 35 minutes and they happen at the beginning of trading hours from 9:15 AM to 9:50 AM. Such deals take place through a separate trading window and are not visible to the regular market.
What are bulk deals?
If the quantity of shares bought and sold is more than 0.5% of total shares of that listed company such deal is termed as a bulk deal. These deals do not require separate trading windows but the broker who manages such bulk deals has to inform the exchange about such transactions to the exchange.
Do block deals or bulk deals affect the stock price?
The answer is investors should not take any decision from such deals because we cannot know about the period of holding or liquidity of the stock. Traders should separately study the stock charts and make decisions based on the trend analysis and past date. Investors should be aware about the pros and cons of such activities. Some large HNIs can use this as a prey to attract more buyers.