While being in market you might have heard of this terms known as block deal or bulk deal. However many of us are not aware about difference between bulk block deals.
Today we will know about both this terms, differences and how one can use this information while trading or investing in market.
What is Block Deals
Block deal is a transaction of a minimum quantity of 500,000 shares or a minimum value of Rs 5 crore between two parties.
Wherein both parties agree to buy or sell shares at an agreed price among themselves & inform stock Exchange.
The deal takes place through a separate trading window and they happen at the beginning of trading hours for duration of 35 minutes i.e. from 9.15 am to 9.50 am.
Block deals are not visible to the regular market as they happen in a separate window. Every trade has to result in delivery.
The Securities and Exchange Board of India (SEBI) made rule that price of a share ordered at the window should range within +1% to -1% of the current market price or the previous day’s closing price.
The block deal orders has to be notified to exchanges and are disclosed through data upload software (DUS).
It is also available on NSE, BSE websites with details such as name of the company, client, quantity of shares and the average price at which the deal took place.
What is Bulk Deals
A bulk deal is a trade where total quantity of shares bought or sold is more than 0.5% of the number of shares of a listed company through single or multiple transactions.
It happens during normal trading window provided by your broker. Unlike block deals, bulk deal orders are visible to everyone.
The broker who manages the bulk deal trade has to provide the details of the transaction to the stock exchanges whenever any such deal happens & on immediate basis.
Who Can Trade Block Deals & Bulk Deals In Share Market
So this kind of deals is not for small retail investors. Big Institution, Fund Houses, Foreign Institutional Investors (FII), Banks, Mutual Funds, Insurance firms, High Net Worth Individuals (HNIs) such big players participate.
The percentage of money & Share involved is very high hence its done mostly by above players in market.
So how is it useful for normal traders or investors like you and me? Investors or traders often look at bulk and block deals to conclude interest of big investors in a particular stock.
If several deals happening in a stock continuously it may be a sign of that stock might shoot up or down depending upon the deal.
However such deals can be helpful to trigger any strategy, but you have to be careful as well. Some of the deals happened recently are listed below for reference.