What is Block Deal: Sometimes it happens in the stock market that a share suddenly goes up or falls, without any big news. This happened recently with the shares of Bajaj Housing Finance. On Wednesday, this share opened at Rs 97.56 in the morning, went up to Rs 98.80 during the day, but finally closed at Rs 96.84. This sudden movement was due to the block deal. Let us understand in simple language what a block deal is and how shares are affected by it.
What is a block deal?
A block deal is a trade in which a large investor, such as a mutual fund, insurance company or any large financial institution, buys or sells a large number of shares at once.
Typically, such deals involve a minimum amount of ₹5 crore or 5 lakh shares. Block deals do not happen in the general market. For this, the buyer and seller decide the price and number of shares in advance. Its advantage is that due to such a big purchase or sale the share price does not go up or down suddenly. After the deal is completed, its information is given to the exchange.
block deal rules
SEBI and exchanges have made some rules for block deals:
The deal price can be only 1% above or below the current market price.
The number and price of shares of the buyer and the seller should match completely.
The block deal window opens only twice a day: 8:45 am to 9:00 am and 2:05 pm to 2:20 pm.
If the deal is not completed within 90 seconds, it is automatically canceled.
This deal is possible only in big companies or F&O shares.
Reason for falling shares of Bajaj Housing Finance
There was a big fall in the shares of this company on Tuesday because a big investor sold a huge amount of shares through a block deal. When a big investor takes such a big step, it sends a message to the market that he is reducing his holding in the stock. After this, small investors get scared and the shares may go down further.
Impact on retail investors
Block deals do not directly affect small investors, but they do have indirect effects:
The mood of the market changes: big selling increases fear, big buying increases confidence.
Price direction is affected: Not directly by trades, but by investor sentiment.
Liquidity increases: The market runs more smoothly.
Short-term volatility: Sudden deals can cause movement in share prices.
The main impact of block deals is on the mood of the market and the direction of prices. Like in the case of Bajaj Housing Finance, a sudden block deal changed the market trend. Some investors consider it a risk, while some may consider it a long-term buying opportunity. Therefore, instead of being afraid of block deals, it is important to understand it and take right decisions.
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