A 🧵on the basics of block and bulk deals.

Block and bulk deals are large purchases of stocks by investment banks, mutual funds, hedge funds, pension funds, FIIs, and promoters. Tracking block and bulk deals can help give you a sense of what these large players are thinking.

A single transaction where shares more than Rs 10 crores or the number of shares traded are more than 5 lakh is considered a block deal.
Block deals are carried out in separate trading windows. This trading window operates in two shifts of 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 deals happen in different windows to reduce volatility and sudden price movements. Given that they are traded in a separate window, they do not show up on the volume charts.
Brokers facilitating the transaction are required to inform the exchange. You can track bulk and block deals on NSE & BSE:
https://t.co/pwTyzWTnUL

https://t.co/g9BbHiEag3
Block deals are placed within ( + or -) 1% of the Block Reference Price.
Block reference price is determined in 2 ways:
The previous day’s closing price for the morning trading window.
Volume-weighted average price (VWAP) of the stock between 1:45 to 2:00 PM for the afternoon.
A transaction involving at least 0.5% of the total listed shares of a company is a bulk deal. Unlike Block deals, bulk deals happen during regular trading hours and are visible to all the market participants.
The broker is required to inform the stock exchange details like the amount of the transaction, deal participants and other required information.
Can a bulk deal also be a block deal?

Yes, the parties can also carry out the bulk deal as a block deal if it meets the requirement of both the deals.
Requirement for a bulk deal:
If the transaction involves 0.5 % of the shares of a company

Requirement for block deal: Deal value is Rs 10 crores, or the number of shares traded are more than 5 lakh
A lot of investors track these bulk and block deals closely to keep track of what famous investors are buying and selling. Some even blindly buy & and sell just because some well known investors bought or sold.
One point to keep in mind is that for every big investor buying a particular stock, there is also a big investor selling its position in the same share.
Bulk and block deals data contain a lot of noise, and copycat investing can be pretty risky. You need to have your own thesis for buying or selling something at the end of the day.
These deals indicate corporate interest and may cause prices to fluctuate in the short term.

However, investment decisions should not be made based on indicators alone, but also based on fundamentals.
Check out the Varsity videos to learn about the basics of stock market 👇
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