Block Deal Vs Bulk Deal: Basic differences and how they affect stock's price? Explained

Block Deal Vs Bulk Deal: A bulk deal and a block deal are the two kinds of stock market transactions used by institutional investors, large funds, mutual funds, investment banks, FIIs and HNIs to transact large volumes.

What is a Block Deal?

As per BSE, a block deal is a single trade having quantity greater than or equal to 500,000 or value greater than or equal Rs 5 crores, executed through a block deal window. Block deals take place during a specific trading window - the block deal window.

Since block deals occur in a trading window that is special, retail investors cannot view the deal.

Block Deal Timings NSE, BSE

As per BSE website, the traders are allowed to enter the block deal orders only during the first 35 minutes of the continuous trading session i.e. from 9:15 am to 9:50 am.

As per NSE website, this trading window operates in two shifts, lasting 15 minutes each :

– Morning trading window from 8:45 AM to 9:00 AM.

– Afternoon trading window from 2:05 PM to 2:20 PM

Block deal orders cannot be traded partially. If not traded fully, the order is cancelled. The transaction of block deals takes place according to a Block Reference Price.

As per the block deal order for scrip, it should be within the range of (+/-) 1% from the ruling market price (i.e. last traded price) or the previous closing price (if there is no trade executed in the scrip before entering of the block deal order) subject to the applicable price band for the scrip.

Ajay Lakhotia, Founder & CEO of StockGro said, "Institutional investors, large funds, and HNIs use block and bulk deals to conduct large-volume trading. Block trades are conducted in a separate trading window and provide more privacy to the parties involved. In contrast, bulk deals are conducted during regular market hours and are visible to everybody."

"Data on the bulk and block deals is essential to everyone as it shows where institutional investors are interested and can also help in foreseeing the trend. Retail participants can take a view on a company based on the Block or Bulk deal entered by Institutional Investors and HNIs," he added.

What is Bulk Deal?

Bulk deals are those deals that involve transactions of at least 0.5% of the total listed shares of a company. In contrast, to block deals, bulk deals take place within regular trading hours in the stock market i.e. 9:15 am to 3:30 pm.

Unlike the counterpart, bulk deals are not hidden from retail investors. The information is made available easily on the bourses.

Bulk deals may be executed in the trading window of block deals if it meets the conditions for block trading.

How do these deals affect the stock market?

Block deals and bulk deals on exchanges are watched by investors keenly as they reflect the interests of big investors in the stock. Also read- EXPLAINED - Share Buyback: What does it mean and why do companies do it? What are the types of buyback?

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