What is Block Deal in Share Market – Block Deals vs Bulk Deals
In today’s article, we will discuss What is Block Deal in Share Market, and what is difference between a block deal and bulk deal? Let’s get started!!!
A block deal is a trade of a large quantity of shares, typically involving a minimum of 5 lakh shares or a minimum value of Rs. 5 crore, that takes place outside of the normal trading process on a stock exchange. These deals are typically executed through negotiated transactions between two parties, rather than through open market bidding.
They are usually conducted by institutional investors, such as mutual funds and foreign portfolio investors, and are often used for large-scale buying or selling of shares.
These deals are usually executed at a pre-determined price and are reported to the stock exchange on the same day of the transaction.
Block deals are usually reported in a separate section on stock exchange website and are also disclosed to the public through newswire or other means.
They are usually done by larger investors such as mutual funds, Insurance companies, foreign portfolio investors and high net worth individuals.
Block deals and bulk deals are both types of large-scale trades that take place on stock exchanges. However, there is a difference between the two.
A bulk deal is a trade of a large quantity of shares, typically involving a minimum of 0.5% of the number of shares of a particular company, that takes place on a stock exchange.
These deals are executed through open market bidding and are usually conducted by retail and institutional investors.
These deals are usually reported to the stock exchange on the T+1 day (Trade date+1 day).
In summary, block deals are typically executed through negotiated transactions between two parties, while bulk deals are executed through open market bidding. Also, the minimum quantity/value of shares is higher in block deals.
What Happens After Block Deal in Stocks?
After a block deal in stocks, the shares that were bought or sold in the deal will be reflected in the shareholder's portfolio and the company's shareholding pattern. The price of the stock may also be affected by the block deal, depending on the volume of shares traded and the overall demand for the stock.
The stock exchange will also make the details of the block deal available to the public, including the names of the parties involved, the number of shares traded, and the price at which the shares were sold. This information can be used by investors to make informed decisions about buying or selling shares in the company.
The stock price may also be affected by the block deal, if the deal is large enough and if the shares were bought or sold at a price different from the current market price. If the deal is executed at a price higher than the current market price, it may indicate bullish sentiments and lead to an upward trend in the stock price. On the other hand, if the deal is executed at a lower price, it may indicate bearish sentiments and lead to a downward trend in the stock price.
It's also worth noting that Block deals are usually made by institutional investors, therefore the impact on the market price might be less pronounced than if a similar amount of shares were bought or sold by retail investors.
FAQs
- Who conducts block deals in stocks?
Block deals are usually conducted by institutional investors, such as mutual funds and foreign portfolio investors.
- How are block deals executed?
Block deals are typically executed through negotiated transactions between two parties, rather than through open market bidding.
- How do I find information about block deals in stocks?
The details of block deals, including the names of the parties involved, the number of shares traded, and the price at which the shares were sold, are available to the public through the stock exchange's website or through other financial news sources.
- How do block deals affect stock prices?
The stock price may be affected by a block deal if the deal is large enough and if the shares were bought or sold at a price different from the current market price. A block deal executed at a higher price than the current market price may indicate bullish sentiments and lead to an upward trend in the stock price, while a block deal executed at a lower price may indicate bearish sentiments and lead to a downward trend in the stock price.
- Can retail investors participate in block deals?
Block deals are typically conducted by institutional investors, so retail investors may not have the opportunity to participate directly in block deals. However, they can monitor the block deal information and use it to make informed decisions about buying or selling shares in the company.