BSE NSE Stocks Bulk Deals, Stock Market Volume Analysis
BSE NSE stocks bulk deals have to be seen as distinct from block deals. Remember,
not all bulk deals are block deals and not all block deals are bulk deals. A bulk
deal can be executed either in the block deal window or on the normal window. A
bulk deal is defined as a set of trades when more than 0.5% of the capital exchanges
hands by a single trading party. Bulk deals have to be statutorily reported by the
dealing parties after close of trading and the exchange puts it up on its website.
Bulk deals can be executed on the BSE or the NSE. Bulk deals can be executed on
the normal window too and that means there is a real risk of either the trade being
fronted or the trade being disrupted by an interested third party. Many bulk buyers
also use the slice buying method to get the best acquisition price through the day.…
Stock Market volume analysis using bulk deals on LKP Securities…
LKP has a dedicated section for capturing all the bulk deals for a particular date.
In fact, a historic reading of bulk deals gives you a quick idea of specific stocks
where institutions are either buying or unwinding. In fact a time series reading
of the bulk deals data can give quick views about where the accumulation is happening.
The best way to leverage the bulk deals data is to index it institution wise and
stock wise to get a longer term perspective.
Why to be cautious on bulk deals…
There are 3 things that traders and analysts must be careful while reading the bulk
deals data. In fact, investing based on bulk deals can at times be a demand trap
and hence you need to be cautious…
- Quite often the bulk deals may be between a well known FII on the
buy side and a lesser known name on the sell side. It is quite likely that the seller
is just a P-Note account of the same FII and this is just a bulk transfer of shares
from one account to another account. That does not really mean much.
- Be cautious on bulk deals in small and mid cap companies. Quite
often these kinds of bulk deals are used to kindle interest in the stock and if
you buy purely based on bulk deals you may end up with dubious shares at higher
levels. Remember, 0.5% of capital is quite small in case many mid-cap and small
cap stocks that are low priced and hence it is very easy to create bulk deals in
- Many bulk deals are in the nature of intraday trades or in the form
of very short term trades. These bulk deals do not have any investment implication.
Thus when you create a longer term perspective of bulk deals you need to adjust
for the impact of such intraday and short term trades so that you get a more reliable
picture of the market!