Technical analyst follows the Fundamental Analyst which are also called the stronger hands, because they can do any level of mechanism in investigating a stock. Market is governed by Huge Financial Institutions, FII’s Banks, and other large NRI’s and other institutions. These large bodies invest in very large Quantity. Thus this sudden purchases makes the Script to surge High or Surge down all of a sudden, Taking the stock price high or Low suddenly. Can see price of stock which was stagnant, shooting up by a large way suddenly. These are purchases by these bodies. These type of Orders are called : BULK and BLOCK deals.
Stronger hands can change the market direction. These Stronger hands has a good technical team, tools and data’s available faster to them, so if we follow stronger hands most of the time we will get success. Bulk and Block deals are made buy stronger hands we can follow them for better results in most of the times.
A block deal happens through a separate special window “Block Deal window” which is provided by stock exchanges. This window is open for only 35 minutes in the morning trading hours. Usually a Block Deal happens when two parties agree to buy or sell shares at an agreed price among themselves and inform the exchange. The orders in a block deal are not shown to the people who trade from normal trade window.
The Securities and Exchange Board of India (SEBI) rules state that block deal orders should be placed for a price not exceeding +1% to -1% of the previous day’s closing or the current market price. Sebi also states that a block deal is a single transaction of a minimum quantity of 500,000 shares or a minimum value of Rs.5 crore and is done between two parties. Stock exchanges should disclose the information on block deals to the public on the same day after market hours. This should contain information bits like name of the scrip, name of the client, quantity of shares, traded price and so on.
A bulk deal is said to have happened if a single investor in a single or multiple transactions has either purchased or sold more than 0.5% of a company’s equity shares. Bulk deal can be transacted by the normal trading window provided by brokers throughout the trading hours in a day. Bulk deals are market driven and take place throughout the trading day. The broker, who facilitates the trade, has to provide details of the trade to the stock exchanges whenever it happens. Bulk orders are visible to everyone. If the bulk deal happens through a single trade, it should be notified to the exchange immediately upon the execution of the order. If it happens through multiple trades, it should be notified to the exchange within one hour from the closure of the trading.
While major participants in bulk and block deals are institutional players, there are super HNI’s (High Net Worth individuals) also involved in such deals occasionally.
Mostly, mutual funds, financial institutions, insurance companies, banks, venture capitalists and foreign institutional investors trade in such deals. The window is also used by many promoters of the companies..
What does it mean for an investor?
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