Terms like “bulk deal” and “block deal” are frequently encountered by investors monitoring stock market movements in daily trade updates. These significant transactions can occasionally be linked to a dramatic increase or decrease in the price of a stock. Investors can better understand market activity by knowing what these trades mean, how they differ, and why they matter.
Bulk Deal
When an individual or institution purchases or sells 0.5% or more of a company’s total equity shares in a single trading day, this is known as a bulk deal. The stock exchanges report these transactions after the market closes, and they occur within regular business hours.
Since big buying or selling frequently indicates high interest or a large investor’s exit, bulk deals can have an immediate effect on a stock’s price. Sometimes, institutional players’ large acquisitions are seen by retail investors as a sign of support for the business.
Block Agreement
The stock exchanges offer a unique trading window for the execution of block deals. The transaction must involve at least 5 lakh shares or be worth more than Rs 5 crore in order to be considered a block trade. The buyer and seller are pre-identified, and these transactions take place during a designated period of time known as the block deal window.
Facilitating large transactions without creating undue market volatility is the primary goal. Block deals are disclosed to the exchanges right away, in contrast to bulk deals.
Distinctions Between Block and Bulk Deals
Compared to block deals, bulk deals usually include lower quantities and are completed during regular trading hours. At the conclusion of the trading session, they are revealed. Block deals, on the other hand, are intended for very big transactions, occur inside a specific time frame, and are disclosed instantly.
Block deals are typically pre-planned and include major institutional investors, whereas bulk deals may indicate growing interest in a company.
Deal Types in the Stock Market
In the equity market, there are essentially four different kinds of transactions. Investors on the exchange engage in regular buying and selling during trading transactions. Large trades that surpass a company’s equity requirement of 0.5% in a single day are referred to as bulk deals. High-value or high-volume transactions carried out through a designated timeframe are known as block trades.
Off-market transactions, including inter-promoter transfers or strategic stake sales, entail the transfer of shares outside of the exchange platform.
What Do Investors Need to Remember?
Tracking bulk and block agreements, according to market analysts, can provide insightful information about the behavior of big investors and institutions. They advise against basing investment choices only on these transactions, though. It is recommended that investors take into account a company’s long-term growth prospects, management caliber, financial performance, and fundamentals.
