Bulk & block deal

What is a Bulk Deal - Bulk Deal is a trade where the quantity bought/sold is more than 0.5% of the number of shares of that company.

What is a Block Deal - A Block deal is a trade where the minimum order size for the trades shall be minimum be Rs.10 Crore. Block deal is executed through a special window. The timing of Morning Block Deal Window is between 08:45 AM to 09:00 AM while the timing for Afternoon Block Deal Window is between 02:05 PM to 2:20 PM.

How to identify investment opportunity from Bulk & Block Deals -

Big investors/mutual funds are not lucky as we are because we can sneekly buy or sell any stock with letting anyone know. But this is not the case with heavyweight investors because the value in which they transact is very high and for high volume transactions, investors need to notify the exchange. This is how bulk and block deals happen.

This means, whenever any big investor/fund house invests in any company which fulfils the criteria of bulk/block deal, they will have to notify the exchange. Now there are two possibilities -

  1. First possibility is that, that particular investor has invested in that company earlier and they are again picking stakes through bulk/block deals.
  2. Second possibility is that, the investor is investing for the first time in that stock.

Now, both these events will have different outcome. Where lies the opportunity?

In the first case, the street won't value the event much because they already know that the investor had invested in that stock previously. So, this time he is not doing something different.

But in the second case, where a fresh investment is made - the street would give it a big thumbs up. The investing community is excited about a big investor entering into a new name - which makes them believe that there must be some interesting story there. Due to this, there is a big buying interest seen from other investors.

Recently, there was a bulk deal done by Anil Goel where he bought 54,375 quantities of Avadh Sugar & Energy Ltd at Rs.789.70. The stock hit a high of 850 & 898 on the next two days.

Strategy to replicate renowned investors -

Investors like Anil Goel, Dolly Khanna, Porinju and many more have created enormous wealth from the stock market. Following their foot trails can help in creating decent wealth if not exactly replicate their performance. However, it is always better to do our own research and develop the conviction before investing the hard earned money.

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