Rise in block deals reveals churning fever

The surge in the number of block deals has, in turn, boosted the daily turnover on the Bombay Stock Exchange (BSE). The average daily turnover on the BSE has gone up from Rs 2,309.44 core in January 2005 to Rs 2,483.81 crore in February.

In Wednesday's trading, a huge block deal of 86 lakh shares amounting to approximately Rs 786 crore was executed on the BSE. On February 2, 2004, the total turnover on the BSE touched a high of Rs 3914.20 crore.

This was partly because of the huge block deal on the Bharti Tele-Ventures counter. Warburg Pincus sold a massive 68 million shares to Morgan Stanley in the deal.

On Tuesday March 1, the promoters of Abhishek Industries sold a 7 per cent stake to Citigroup's private equity arm for approximately Rs 45 crore.

On Monday, the promoters of Mahindra Holdings & Finance sold nearly 20 per cent of Mahindra Gesco Developers equity to four foreign institutional investors in a block deal on the BSE at Rs 135.06 per share.

The shares were bought by HSBC India Opportunities Fund, Goldman Sachs Investment, T Rowe Price International and Master Trust Banker J B Fund.

An equity dealer at a domestic broking firm said, "In large stocks, the idea of executing a (transfer through a private) block deal is to ensure the deal does not impact the share price in the secondary market."

On February 24, the BSE's total turnover touched a new high of Rs 3,432.93 crore, thanks to two massive block deals in Indiabulls and Sun Pharma.

In Indiabulls, Goldman Sachs Investment bought 15 lakh shares from Infinity Technology Trust at Rs 114.23 per share, while in Sun Pharma, Capital International Inc. sold 20.2 crore million shares at Rs 475.11 per share.

Recently, Goldman Sachs shed its holding in Shaw Wallace at Rs 222.81 per share.

Deals galore

Feb 24: Two huge deals in Indiabulls and Sun Pharma

Feb 28: Four FIIs buy 20% of Mahindra Gesco

March 1: Citi arm buys 7% in Abhishekh Industries