What is a Block Deal?
When does the block deal take place?
Let’s understand how this BRP is derived for both the block deal windows. For the morning window, the BRP will be the previous day’s closing price of the stock. For the afternoon window, the BRP will be the volume-weighted average price (VWAP) of the trades executed between 1:45 PM to 2:00 PM on the normal trading window in the equity segment. If no trades took place between 1:45 PM to 2:00 PM then, the VWAP of trades executed between 9:00 AM to 1:45 PM would be considered as BRP. Further, if no trades took place between 9:00 AM to 1:45 PM then the previous day’s closing price of the stock would be considered as BRP.
Also, to avoid panic within retail investors, whenever the block deals are executed, they are not visible on the normal trading window of retail investors i.e., between 9:15 AM to 3:30 PM. Stockbrokers who execute these deals must report them to BSE or NSE on that day itself. The exchanges must disclose this information after the market hours on their websites. This information includes the name of the scrip, the name of the buyer and seller, the total number of shares traded by a client, traded price, etc.
Bottom line:Block deals conducted by these big market players are usually for their businesses or portfolio management services being offered to a large number of retail investors. Sometimes we might not know their objective behind buying/selling a stock in the market. Hence, investors should not blindly make investment decisions based on them. If you want to learn more about Block deals, what happens behind the systems, how to interpret them, where to find Block deal data, etc. then stay tuned for the second part of this blog. See you soon!