The combined value of bulk and block deal purchases conducted on the premier stock exchanges fell sharply in 2008-09. According to data provided by the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), the combined aggregate value of such ‘buy’ deals was Rs 50,788 crore – down 76 per cent from the Rs 2,12,799 crore worth of bulk and block purchases during the previous financial year.
In fact, in FY 2008, the equity transactions under this category had reported a 135 per cent rise, even as the stock markets posted a gain of almost 20 per cent. But last financial year, equities lost 37 per cent.
| BULK BLOW Aggregate bulk and block deals | ||
| Rs crore | Buys | Sell |
| 2007 | 90,385 | 61,980 |
| % chg | 6.27 | -3.32 |
| 2008 | 2,12,799 | 97,403 |
| % chg | 135.44 | 57.15 |
| 2009 | 50,788 | 51,810 |
| % chg | -76.13 | -46.81 |
| % change over previous year | ||
A block deal is a single transaction that involves at least 500,000 shares, or a minimum value of Rs 5 crore. A bulk deal is a transaction in a single scrip for a client where the total quantity bought or sold is more than 0.5 per cent of all the equity shares of a company.
Both the transactions are further categorised into ‘buy’ or ‘sell’ on the basis of the party which discloses the deal to the stock markets. For example, while every transaction has a buyer or a seller, if the notice of a bulk or a block deal is provided by the buyer of the shares, the deal is said to be a ‘buy’ deal.
Even the market share of bulk and block purchases in the total cash market turnover dropped to 2.10 per cent in FY09 from 2.66 per cent in FY08. In volume terms, the total combined transactions in this category declined by 31 per cent in 2008-09 as compared to a rise of 42 per cent reported in the previous financial year.
Traders attributed the reduced numbers to the 13 per cent decline in the combined aggregate volume of BSE and NSE in the cash markets, as compared with a 76 per cent rise reported in the financial year 2008.
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Almost all bulk and block deals were struck by foreign institutional investors (FIIs), promoters or third parties. FIIs such as Morgan Stanley, Deutsche Securities, Citigroup Global, Merill Lynch and Goldman Sachs Investments accounted for 35 per cent of the total transactions.
Domestic institutional investors (DIIs), such as insurance companies, mutual funds and banks, accounted for just 3 per cent of the deals. All the balance transactions were executed by promoters and other parties.
During the period under review, 124 transactions in this category had a value of over Rs 100 crore each. Of these, 60 transactions were from the buying side, while the remaining 63 were from the selling side on the bourses.
One of the most important deals struck during the year was in the Spice Telecommunication counter in July 2008 when Idea Cellular bought over 281 million equity shares of the company for a total consideration of Rs 2,176 crore from Mcorp Global Communications.
Also, Tata Sons bought 5 million equity shares of Tata Steel from another group company Tata Motors for a total consideration of Rs 243 crore on the BSE. Larsen and Toubro (L&T) also purchased 39 million shares of Satyam Computer Services at an average market price of Rs 34.52 via a bulk deal.