Bulk Deals vs Block Deals: What’s the Difference in Stock Trading?

Bulk and block deals are the most significant types of share transactions in the stock market. They are similar but different types of transactions. Both deals impact investors and offer different advantages.

It is essential for you to have a thorough understanding of bulk and block deals, as well as the differences between them. This will help you create well-constructed strategies to profit from the market.

In this blog, we are going to discuss the concept of bulk deals vs. block deals and learn their advantages, differences, etc.

What Do You Mean By Bulk Deals in the Share Market?

Bulk deals in the stock exchange refer to transactions involving large volumes of shares executed during the exchange’s regular trading window. These transactions typically involve multiple traders. The volume of shares that qualifies as a bulk deal may vary depending on the specific stock exchange.

When a bulk trade takes place in the share market, they record these transactions and make them public through their communication mediums. This informs people about such bulk transactions taking place in the market and has an indirect impact on the market and such specific shares.

What Do You Mean By Block Deals in the Share Market?

Large investment bodies such as mutual funds, banks, and insurance companies participate in block deal transactions. A single transaction in a block deal is worth multiple crores of rupees for at least five lakh shares or more.

These transactions occur in the stock exchange’s main order book, which opens twice daily for 15-minute sessions only.  It happens once in the morning from 8:45 to 9:00 AM and once in the afternoon from 2:05 to 2:20 PM. Unmatched transactions are cancelled immediately and do not carry over to the next session.

These transactions are calculated by block reference prices set by the stock exchange. Trading institutions generally make these deals to accomplish investment goals and provide exposure to specific stocks or industrial sectors.

Difference Between Block and Bulk Deals 

We must know their differences to understand the concept of bulk deals vs. block deals. Here is a list of key differences between bulk and block deals:

Execution of Bulk and Block Deals

Knowing the differences between block and bulk deals, we can understand that both transactions occur in different media. Hence, their execution process is different.

A block deal is executed through a negotiated agreement between two parties outside the regular stock exchange trading platform. Trading institutions make these deals in the stock exchange’s main order book, where they negotiate for such deals. If a deal is not done in one session, it will be cancelled immediately and not carried over to the next session.

Bulk deals take place on regular trading platforms during trading hours. Traders buy at least 0.5% of the company’s total listed shares. If a party makes a deal in more than 0.5% of listed shares with a value greater than Rs. 10 crores, they can trade in the block trading window among trading institutions.

Benefits of Bulk Deals

Here is a list of the key benefits of bulk deals in the stock market.

1. Cost-Effective: Bulk deals generally have relatively lower transactional costs when compared to buying and selling small quantities of stocks.
2. Flexibility: Investors can execute bulk deals at any point in time within the trading hours. This offers flexibility in trading.
3. Reach: The stock market discloses bulk deals at the end of the day on its official website. This provides transparency and reach to all individual traders, causing an impact in the market.

Benefits of Block Deals

Here is a list of the key benefits of bulk deals in the stock market.

• Lower Speculation: Block deals are generally disclosed within a few days after the transactions. This helps to reduce spontaneous fluctuations in the market, maintaining stability.
• Benchmark: Trading institutions are managed by experts, and people can take hints or structure their trades based on these transactions.
• Supportive hand for Companies: Block deals on some specific underrated companies to boost their visibility in the stock market and provide exposure to their business.

Final Thoughts

As we know the concept of block deals vs bulk deals, we can understand the minor differences between them and the difference in the impact they have on the share market. Individual investors can take valuable insights from the news of these deals and make trade decisions accordingly. 

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