BLOCK DEALS VS BULK DEALS: KNOW THE DIFFERENCE
What Is Block Deals and Bulk Deals?
Bulk and block deals on the exchange are attracting a lot of attention from investors. Although bulk and block deals sound similar, there is a distinction to be made.
What is a Block deal?
It is an Exchange transaction between two parties in which they agree to buy or sell shares at an agreed price for a minimum quantity of 5,00,000 shares or a minimum value of Rs 5 crore. The transaction takes place in a separate trading window and takes place at the start of trading hours for 35 minutes, from 9.15 a.m. to 9.50 a.m. Every transaction must result in a delivery.
What is a Bulk Deal?
A bulk deal is a transaction in which the total number of shares acquired or sold exceeds 0.5% of shares in a publicly traded firm. Bulk transactions take place during the broker’s normal trading hours. The broker in charge of the bulk deal trade must report the transaction to the stock exchanges as soon as it occurs. Bulk deal orders, unlike block deals, are visible to everyone.
Why Bulk Deal and Block Deal are Important for Investors?
FII, fund managers, banks, insurance companies, and other organisations regulate the stock market. These organisations put a lot of money into it. They prefer to conduct business in bulk or in blocks. This method of transaction moves stock upwards or downwards.
These transactions demonstrate to investors how to buy and sell stocks. This implies that stock market traders can rely on data from bulk and block transactions for trading signals.
How do Bulk Deals or Block Deals affect a stock?
Bulk and block deals are frequently used by investors to assess the interest of large investors in the stock. When several deals occur in a stock over a period of time, it can be interpreted as a vote of confidence, and the stock price may rise in the near future.
However, the purchase of shares by a large institution or investor does not guarantee that the stock will rise.
Many times, the last leg of buying by a significant investor who wants to communicate his interest in the stock is the massive block of shares purchased that is disclosed to the exchange. In summary, some high-net-worth individuals (HNIs) utilise this as a lure to entice more buyers.