A ‘Bulk Deal’ happens when an individual or an organisation buys or sells 0.5% shares (or more) of a company in the open market.
For example, when retail individuals like us buy or sell shares, the quantity is very small.
When small deals like these happen, they are anonymous. Except stock exchanges, no one knows who buys or sells shares.
However, if a big investor decides to buy 0.5% or more shares of a company, it will be displayed publicly for everyone to see. This will appear under the ‘Bulk Deals’ section on NSE and BSE website.
0.5% might appear like a small number, but it isn’t.
To buy 0.5% stake in Reliance Industries, an investor has to buy or sell 3.16 crore shares – at current market price of ₹ 1580 per share that would translate into nearly ₹ 5000 crore!
Bulk Deal Procedure
The transaction is performed during normal market hours – through a broker and the Stock Exchanges have to be informed about bulk deals.
The following details have to be shared with NSE / BSE:
- Name of the Company
- Name of the Client who is buying or selling.
- Quantity of shares to be bought or sold.
- The average traded price.
Bulk Deals could be executed in a single transaction or multiple transactions – depending on the liquidity of a stock.
If a Bulk Deal is executed in a single transaction, the stock exchanges have to be informed in advance.
All Bulk Deals must be purchased for delivery. It cannot be squared off on the same day.
Securities Transaction Tax (STT) and other taxes are applicable for Bulk Deals.
Impact of Bulk Deal on Stock Prices
Bulk Deals can have a significant impact on the stock price of a company – as the value of the deal would be 0.5% or more of the market capitalization.
In mid/small cap companies where there isn’t enough liquidity, Bulk Deals can result in the price shooting up or falling down – depending on whether the shares were bought or sold in the Bulk Deal.
The impact on the price of the stock could remain in the days to follow – as Bulk Deals are usually done by big investors, who have more accurate information related to a company.
Suppose Rakesh Jhunjhunwala buys 1% stake in a company through a Bulk Deal – it is considered to be a huge positive. Many smaller investors could buy the share in the next few days, resulting in increased demand – which will result in the price going further up.
The opposite reaction is likely to happen when Jhunjhunwala sells his stake.
How to Find Bulk Deals
To find the latest Bulk Deals on NSE – Click Here
To find the latest Bulk Deals on BSE – Click Here
You can also find Bulk Deals of companies on websites like Moneycontrol. To get the latest bulk deals of Reliance Industries – Click Here