In the stock market, you might have come across terms such as block deals and bulk deals. Let us understand these terms and how they happen in the stock market.
When market participants such as institutional and retail investors trade large number of shares on the NSE or BSE in one tranche then these tyle of deals are simply referred to as Bulk and Block deals. These market participants usually trade in large number of shares after a careful research and analysis of the stock and market.
Now let us first understand what is block deals and how its reported in the stock market.
What is block deals
Block deal is a trade, with a minimum quantity of 5 lakh shares or minimum value of Rs 5 crores, executed through a single transaction, on the special “Block Deal window” of the stock exchange.
Every trade executed in this window must result in delivery and shall not be squared off or reversed.
Block deal happens when two parties agree to buy or sell stocks at an agreed price between themselves and inform the stock exchange.
The morning block deal window (first session) operates between 08:45 AM to 09:00 AM.
Afternoon block deal window (second session) operates between 02:05 PM to 2:20 PM.
The reference price for execution of block deals in the morning window shall be the previous day closing price of the stock.
The reference price for block deals in the afternoon window shall be the volume weighted average market price (VWAP) of the trades executed in the stock in the cash segment between 01:45 PM to 02:00 PM. Between the period 02:00 pm to 02:05 pm, the stock exchanges shall calculate and disseminate necessary information regarding the VWAP applicable for the execution of block deals in the afternoon block deal window.
The stock exchanges shall disseminate the information on block deals such as the name of the scrip, name of the client, quantity of shares bought/sold, traded price, etc to the general public on the same day, after the market hours.
The orders placed shall be within ±1% of the applicable reference price in the respective windows as stated above.
You can get details of block deals from NSE and BSE websites;
What is Bulk deal
Bulk deal is a trade, where the total quantity bought or sold is more than 0.5% of the number of equity shares of the company listed on the exchange.
The quantitative limit of 0.5% could be reached through one or more transactions executed during the day in the normal market segment.
Stock brokers provide normal trading windows for bulk deals.
The stockbroker who facilitates such trade is required to inform the stock exchange on a daily basis with the following details;
- Name of the Scrip
- Name of the Client
- Quantity of Shares bought/sold
- Traded Price
The Stock exchanges shall disseminate the aforesaid information on the same day after market hours to the general public.
In general, bulk and block deals are done by institutional players and high net worth individuals.
Links to get bulk deals;
