Bulk Deals vs Block Deals in Share Market
Among the various types of transactions that take place on the stock exchanges, block deals and bulk deals are among the most significant. These are two different types of transactions. Yet, many people use the two terms interchangeably. Therefore, understanding the differentiating factors in bulk deals vs block deals is crucial for investors to make well-informed decisions.
What are Bulk Deals in Stock Market
Bulk deals refer to large-volume stock transactions conducted through the regular trading window of a stock exchange. Usually, multiple investors are involved in buying or selling a significant number of shares. The criteria for categorising a transaction as a bulk deal might differ based on the regulations of different stock exchanges.
Sometimes, a deal needs to involve a minimum number of shares or meet a specific value threshold to be considered bulk. The exchanges report these transactions and disclose them to the public through their reporting mechanisms.
Companies | Type | Bidding Dates | |
| Regular | Closes 18 Nov | ||
| SME | Closes 18 Nov | ||
| Regular | Closes 22 Nov | ||
| SME | Opens 21 Nov | ||
| Regular | - |
Benefits of Bulk Deals
The benefits of bulk deals are as follows:
-
Enhanced Visibility
In the case of bulk deals, the public receives a disclosure of the buyer’s and seller's identities, providing transparency and market insight.
-
Cost-effectiveness
Bulk deals often come at lower transaction costs compared to buying or selling shares in smaller quantities, making them a more economical option.
-
Flexibility
Bulk deals allow the buyer and the seller to execute large transactions at any point during trading hours, offering flexibility in timing and execution.
What are Block Deals in Stock Market
In block deals, a large number of securities are bought or sold in a single transaction, usually involving at least 5 lakh shares or shares worth ₹5 crore. Institutional investors like mutual funds, insurance companies, or banks negotiate the execution of such deals in the exchange's main order book.
The stock exchange where the shares are traded receives reports of these deals. Typically, block deals are conducted to meet specific investment goals, such as adjusting exposure to a certain stock or sector.
Benefits of Block Deals
The benefits of block deals are as follows:
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Enhanced Efficiency
Block deals enable large transactions without inducing significant price fluctuations.
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Confidence Indicator
Positive block deals indicate investor confidence in the company's future prospects.
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Market Intelligence
Block deals offer valuable insights into the perception of institutional investors.
Difference Between Bulk Deal vs Block Deal
The following table showcases the key difference between bulk deals vs block deals:
|
Parameters |
Bulk Deals |
Block Deals |
|
Purpose |
These deals are conducted for various purposes, such as portfolio rebalancing, institutional investing and market-making. |
Investors usually execute these deals to accomplish certain investment goals, like adjusting their exposure to a specific stock or sector. |
|
Regulatory Requirements |
If the trade surpasses 0.5% of the company's shares, it needs to be reported to the stock exchange. |
Traders must pre-arrange and execute these deals within a specific window, usually at the start of trading hours. |
|
Size |
Includes a large number of shares, but are smaller in size compared to block deals. |
Includes a significant quantity of shares or securities, usually more than 0.5% of the company's total outstanding shares. |
|
Participants |
Both individual investors and institutional entities can conduct these transactions. |
Large institutional investors or market players usually execute these transactions. |
|
Trading |
It is executed via the regular trading process on the stock exchange. |
Two parties negotiate and execute the deal outside the open market. |
|
Visibility |
Stock exchange filings make public the details of the deal. |
The public receives the details, yet the deal is privately conducted. |
|
Reporting |
Bulk deals are reported by the end of the trading day. |
Stock exchanges mandate reporting block deals within a specified timeframe. |
|
Impact on Stock Price |
Public disclosure and possible speculation can impact stock prices. |
Private arrangement and execution make it less probable for an immediate impact on stock prices. |
Summing Up Block and Bulk Deals
Learning the differentiating factors in bulk deals vs block deals is crucial for you as an investor. Both types of deals have their advantages and regulatory requirements, impacting stock prices differently.
By understanding these distinctions, you can make informed decisions and efficiently navigate the complex stock market.