Someone sold Zomato shares worth Rs 15 crore via a block deal. What is it?

Block deals on the stock market involve trading in at least 5 lakh shares or trading in shares worth Rs 5 crore. This is done between 9:15 am to 9:50 am on a separate trading windows through a broker and after informing SEBI. 

Some context: You might have bought or sold shares on the stock market or seen or heard someone trading their shares on the stock market. You may know that when you trade in shares, you never know who you are buying your shares from or who you are selling your shares to. You just click the buy/ sell button and your trade gets executed without you being bothered any further. 

So what are Block Deals and how are they different? In Block Deals, things work a bit differently. Now, don't confuse this with Bulk Deals. 

• Block Deals are usually carried out between two known parties where one wants to sell shares of a company while the other wants to buy the same shares. Also, for a transaction to qualify as a ''Block Deal'', two parties (which could be individual investors, mutual funds, or companies) have to trade in at least 5 lakh shares or trade shares worth Rs 5 crore. 

• To make this relatable, here is a real-life situation: Zomato's pre-IPO investors had to hold shares of Zomato for 1 year from the time the shares were allotted since Zomato had no identifiable promoter. Since investors were waiting for the 1 year lock-in period to end on July 25, 2022, investors were waiting to get their hands off their shares at the highest available price on July 25, 2022. By the end of the day, share prices fell by 12% in a day. Now, on July 26, 2022, if you have a look at the ''Block Deals'' report on the NSE website, you will see this: 

• On July 25, 2022, ISHARES INDIA INDEX, a Mauritius-based company block sold shares of Zomato to a related company called ISHARES MSCI INDIA ETF. The trade consisted of one transaction where 27.88 lakh shares were traded at a price of Rs 53.65, meaning a trade of about Rs 15 crore. Whereas, the price for normal investors at 9.30 am was Rs 47.90.
• The impact of Block Deals depends on who is selling what shares and the situations around the sale. In Zomato's case, the share prices fell throughout the day. 
• In Block Deals, since two companies trade in the shares of a third company, the trade is conducted by a broker who has to first inform SEBI about the trade. The trade is then conducted in the initial hours of the day during a 35-minute window between 9:15 am to 9:50 am.
• Block Deals are usually done on a separate trading window and the information of all Block Deals is available on the NSE/ BSE website once the transaction is completed. 
• Block Deals are delivery-based transactions, which means they have to be paid for in cash. A party cannot reverse or square off these transactions during the day, like in intra-day trading. 

How to find all Block Deals on the NSE?

1. Go to the website: https://www1.nseindia.com/index_nse.htm
2. Go to the ''Products'' tab, under the Capital market column, and select ''Equities''

   

3. From the available options, click on ''Historical Data''. 

   

4. Open the ''Historical Data'' tab and then click on ''Block Deals''