Hello again! As promised in the previous blog, today we will continue our discussion on block deals. Before we proceed further, let us have a quick recap - Block deals are large trades with a minimum value of Rs. 10 crores carried out in a single transaction. Exchanges have 2 separate trading windows where eligible participants can place a block deal order. It is mainly executed by big institutional investors in the market. We also talked about the purpose behind block deals, what is Block Reference Price (BRP), what are the trading windows for block deals, etc. Click here to revisit the blog.

How does order matching happen for Block deals?

As discussed before, the block deal is a large trade through a single transaction. Hence, for an order to get matched it should be likewise. The opposite order must have the same quantity and rate for a script. Once the order is placed it is active only for 90 seconds in the system. If not matched exactly as it is within this time, it gets canceled.

For example, let’s assume these 3 Block deal orders:
Buy order of 1,00,000 quantity @ Rs 1000 for scrip ABC
Sell order of 50,000 quantity @1000 for scrip ABC
Sell order of 50,000 quantity @1000 for scrip ABC

How does the block deal affect the market data?
The block deal data is used for updating the script' total quantity traded, turnover value and the number of trades for the day. However, it does not have a direct impact on the prevailing market price of the stock when the trade is executed. Hence, it is not considered while updating the market data such as LTP, LTQ, opening price, high price, low price, closing price, and VWAP for the day.

Where can you find out about Block deals?
You can visit NSE and BSE’s websites for block deals reported to either of them. However, if you want to check block deal data from both NSE and BSE in one place then you can check out this wonderful site called moneycontrol.com. Here, you can enter any date of your choice and fetch the block deal data executed on that day on NSE or BSE as shown below. Just click on the links given above to explore these options.

Can block deals happen for new listings (IPO) shares?

Yes! In the case of new listings, the afternoon window- 2:05 PM to 2:20 PM, is applicable for block deals. The BRP will be the VWAP of the trades executed between 1:45 PM to 2:00 PM. 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 issue price of the stock would be taken as the BRP.

How to interpret block deal information?
By now we have learned that these deals are majorly conducted by institutional investors. These investors are making these buy/sell decisions based on their market expertise and extensive research. Hence, retail investors should keep an eye out for this data. If a recognized institution is taking frequent buy/sell positions in a particular stock it might translate into future trends of that stock. It can tell us in which industry/sector/stock the buying interest is increasing or decreasing. Therefore, retail investors can use this data as further confirmation for their investment decision.

Block Deal Vs Bulk Deal

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