Bulk and block deals in mid- and small-cap companies have gone up sharply in the second fortnight of March. In the weeks ending March 20 and March 27, deals worth Rs 2,757.16 crore (both buy and sell) — the highest in the last six months — were sealed.
Since October, the average weekly deals stood in the range of Rs 150-500 crore.
Market experts attribute this sudden spurt to the fact that with stocks correcting by over 50 per cent in the last one year, there is a general feeling that the worse is over. As a result, a lot of investors, especially high networth individuals (HNIs) and domestic institutional investors (DIIs), are beginning to churn their portfolios. Hence, deals in mid- and small-cap stocks are taking place more frequently.
Anagram Capital Chief Executive Officer (CEO) Mayank Shah said, “Large investors took fresh exposure to equities in March. This led to the recent rally.”
Among mid-cap stocks, some of the largest deals took place in Novartis, Tata Teleservices and MphasiS. In the small-cap segment, bulk deals occurred in Sunteck Real Estate and Madras Aluminium.
Brokers said that the delisting buzz in stocks of Madras Aluminium and Novartis contributed to large bulk deals.
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 where the total quantity bought or sold is more than 0.5 per cent of the entire equity holding of the company. Such transactions are divided into two categories — ‘buy’ and ‘sell’ — and information on such deals is given by stock exchanges.
Manish Sonthalia, Fund Manager, Motilal Oswal Securities, said another reason for the rise in such deals was tax planning by players during the end of the financial year. Many HNIs chose to book losses during the last financial year to set it off against their profits in the current fiscal. They did this to reduce their tax burden, he added.
