Block Deal
A block deal is a single transaction involving a minimum of 5 lakh shares or trades worth at least Rs 10 crore, executed through a separate trading window on stock exchanges to minimise price disruption to the regular market.
Block deals were designed to facilitate large institutional transactions — promoter stake sales, private equity exits, foreign portfolio investor position adjustments — in a manner that did not create excessive volatility in the normal market order book. NSE and BSE operated dedicated block deal windows, which in 2023 were split into two sessions: the first from 8:45 AM to 9:00 AM and the second from 2:05 PM to 2:20 PM, both prior to or after the main market session to protect regular price discovery.
Within the block deal window, buyers and sellers negotiated prices that had to fall within a band of plus or minus one percent of the previous day's closing price or the current market price, depending on the session. This pricing constraint ensured that block deals were executed at fair market-related prices and could not be used to artificially mark prices up or down. Both parties had to independently enter matching orders, and the deal was confirmed only when both sides were matched.
Disclosure requirements were strict. Under SEBI's Substantial Acquisition of Shares and Takeover (SAST) Regulations and Listing Obligations and Disclosure Requirements (LODR), every block deal had to be disclosed to the exchange within 24 hours if it involved a promoter, director, or any entity holding more than 2 percent of the company. Exchanges published block deal data on their websites at the end of each session, making the information publicly available. This transparency made block deals a widely followed indicator of institutional conviction — large promoter sell-downs were sometimes interpreted as a signal of reduced insider confidence, while large FPI purchases through block deals signalled institutional interest.
Notable block deals in Indian market history included promoter dilutions in IT, banking, and FMCG companies, where private equity sponsors exited their stakes after IPO lock-in periods expired. These deals often ran into hundreds of crores and were arranged by investment banks that pre-identified institutional buyers before the window opened, allowing the deal to clear cleanly without leaving unsold inventory.
Block deals differed from bulk deals primarily in execution mechanism and timing: block deals occurred in the dedicated pre-session window, while bulk deals were executed during the normal trading session and only became visible in post-day disclosures.