Have you ever read a financial newspaper or watched a financial news channel? You’ll see and hear words that you’re not familiar with. Bulk deals and block deals are words you’ll hear a lot in the stock market. Do you know the difference between bulk deal and block deal? If your answer is no than let’s discuss them in this article.
Table of Contents
Difference Between Bulk Deal and Block Deal
Here is the bulk deal and Block Deal Meaning:
What is Bulk Deal?
In the financial markets, a bulk deal is anything in which the overall quantity of stocks bought or sold reaches 0.5 percent of a firm’s total equity stocks publicly trading. It’s a market-driven trade that only happens during normal trading sessions when brokers have a trading window.
Important Points
- Brokers who facilitate the transaction are required to inform the relevant exchange.
- They must notify the exchange within an hour of the business day’s ending, particularly if the transactions are done in one go.
- Brokers must provide detailed information about the transaction, such as the script purchased or sold, the customer’s identity, the number or amount of shares purchased or sold, and the trade rate.
- Brokers must also make the details public after the market hours have ended on the same day as the transaction is executed.
- Bulk purchases must always occur in delivery.
- On bulk deal buyers and sellers must also submit a Securities Transaction Tax (STT) imposed by Government of India.
What is a Block Deal?
A block deal is a transaction in which more than 500,000 stocks of a single firm listed on the exchange are exchanged, or stocks worth about as much as Rs. 5 crores. Block transactions can only be done within a certain trading window in the early hours of the day. As a response, the transaction must take place during 9.15 and 9.50 a.m., when the market window is open for Block Deal. This is the major difference between bulk deal and block deal.
Important Points
- Block transactions can be done at a level that is 1% higher or lower than the existing market price or the prior day’s closure price.
- Block deal transactions, like bulk sales, require brokerage firms to inform the exchange with information including the script name, amount and quantity of stocks purchased or sold, the client’s identity, and the trade rate.
- A deal like this will only happen if both stakeholders decide to purchase or sell shares at a set price.
- If the deal must be traded, the stock rate and volume must be equivalent to the opposite block request.
- All block deals must be completely exchanged, or the deal will be considered revoked.
- The deal is only active for 90 seconds in the trading facility (on online trading portals after which it is terminated due to non-execution.
Signification of Block and bulk Deals in Stock Market
Bulk and block deals are often used by consumers to assess the interest of large investors in a stock. If many transactions occur in a share over a span of time it can be interpreted as a sign of trust, and the share price can increase in the coming days.
However, the purchase of shares by a large institution or investor does not guarantee that the price will climb. Often, the massive block of shares purchased that is reported to the exchange is the final leg of purchasing by a major investor who wants to show his confidence in the stock.
In general, several high-net-worth individuals (HNIs) use this as a trick to encourage more customers.
Block Deals and Bulk Deals Today Data
You can get the data for both Block Deals and bulk deals today from NSE and BSE.
For Bulk and block deals today Data of BSE : Click Here
For Bulk and block deals today Data NSE : Click Here
Conclusion
Since few investors want to deal in massive volumes, the range of customers for both bulk and block deals are tiny.
This is all from our side regarding Difference Between Bulk Deal and Block Deal. Let us know your views About block deal is good or bad in the comment section.
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FAQ About block deal meaning
Block deal means buy or sell?
Block Deal happens between two parties. Both buy and sell transaction take place from two different parties.
How to do block deal in NSE?
You need to contact a brokerage firm for that and minimum amount 5 Crore shares or 5 lakhs shares of the particular company
Effect of block deal on share price?
Directly Block Deals don't effect the share price. However, It enhance market sentiments positive or negative about a stock depending on the deal.
Block deal timing
Block Deals market window open for 35 mins starting from 09:15 am and close at 09:50 am.
Block deal is good or bad?
There is no correct answer to this question. It is totally depend on the market, how market takes it. sometime everything is good about a deal but share price will go down and sometime nothing is good in a block deal but price will go up.
