Block deal and bulk deal are terms used in stock exchanges to refer to large transactions of shares that take place between two parties. Here's a brief explanation of each term:
Block deal: A block deal is a trade in which a large number of shares, typically at least 5 lakh shares or a minimum value of Rs. 5 crore, are bought or sold by a single trader or a group of traders. Block deals take place outside of the normal market hours, either in a special session or through negotiated deals between buyers and sellers. Block deals are usually executed at a price that is agreed upon between the buyer and the seller, and the transaction is reported to the stock exchange after it has been completed.
Bulk deal: A bulk deal is a trade in which a large number of shares, typically at least 0.5% of the total number of shares of a company or a minimum value of Rs. 10 crore, are bought or sold by a single trader or a group of traders in a single day through normal market hours. Unlike block deals, bulk deals take place during the normal market hours and are executed through the exchange's trading system. The transaction is reported to the stock exchange immediately after it has been completed.
Both block deals and bulk deals are used by institutional investors, such as mutual funds, hedge funds, and other large investors, to buy or sell a large number of shares of a company in a single transaction. These deals help to facilitate large transactions without causing significant fluctuations in the stock price, which can occur if the transactions were executed through normal trading channels.
SEBI's Regulations regarding Block deals and Bulk deals in India.
SEBI (Securities and Exchange Board of India) is the regulatory body that oversees the functioning of the securities market in India. SEBI has laid down certain rules and regulations regarding block deals and bulk deals in India. Here are some of the key rules:
Reporting requirement: SEBI mandates that all block deals and bulk deals should be reported to the stock exchange within 15 minutes of the trade being executed. This helps to ensure transparency in the market and prevents any manipulation of stock prices.
Price range: The price of a block deal or bulk deal cannot be more than 1% higher or lower than the prevailing market price of the stock. This helps to prevent any significant price movements due to these large transactions.
Pre-trade disclosure: The buyer and seller of the shares involved in a block deal or bulk deal must disclose their identity to each other before the trade is executed. This helps to ensure that the trades are genuine and are not being used for any illegal purposes.
Minimum quantity: The minimum quantity for a block deal is 5 lakh shares or a minimum value of Rs. 5 crore, while for a bulk deal, the minimum quantity is 0.5% of the total number of shares of a company or a minimum value of Rs. 10 crore.
Exclusion from normal trading: Block deals and bulk deals are excluded from the normal trading volume of a stock. This means that they do not affect the daily price movement of the stock and are not considered while calculating the stock's average trading volume.
These rules are aimed at ensuring transparency, preventing any market manipulation, and protecting the interests of retail investors in the Indian securities market.
Interesting data regarding block deals and bulk deals in India:
Here are some interesting data points regarding block deals and bulk deals in India:
In 2021, the total value of block deals in India was around Rs. 1.5 lakh crore, which was a significant increase compared to the previous year. This indicates that there is a growing trend of large transactions taking place outside of normal trading hours.
The banking and finance sector is the most active in terms of block deals and bulk deals in India, followed by the IT sector and the pharmaceutical sector. These three sectors accounted for more than 50% of the total value of block deals and bulk deals in 2021.
In 2021, the National Stock Exchange (NSE) was the most active exchange for block deals and bulk deals, accounting for more than 80% of the total value of such trades. The Bombay Stock Exchange (BSE) accounted for the remaining 20%.
The largest block deal in India in 2021 was the sale of 1.7 crore shares of ICICI Bank by its subsidiary, ICICI Prudential Life Insurance, to a group of investors. The transaction was worth around Rs. 1,300 crore.
In terms of bulk deals, the largest transaction in 2021 was the sale of 50 lakh shares of Avenue Supermarts, the parent company of the supermarket chain DMart, by its promoter Radhakishan Damani. The transaction was worth around Rs. 1,300 crore.
These data points indicate that block deals and bulk deals are an important part of the Indian securities market, and are likely to continue to play a significant role in large transactions going forward. However, it is important to ensure that these transactions are conducted in a transparent manner and do not harm the interests of retail investors.
Reliance Industries has announced the rights issue and currently the issue is open for subscription which would last till June 3, 2020. This Rights Issue looks and is also similar to most rights issues opened in the past for various companies except one thing which has set this issue apart from others in past.
There is much interest in the issue of the rights of Reliance Industries. While not the first company to raise capital through an offer of rights, it was the first company to credit its shareholders' rights entitlement directly to their demo accounts so that they could trade them on the exchange platform.
With lock-outs still effective in most parts of the country, this electronic credit comes handy for shareholders who would not be able to step outside to submit physical application forms. SEBI, in a recent circular, made buying and selling Rights Entitlements (REs) easy and simple. It could also be a preferred method of raising capital for other companies.
Reliance Industries Right Issue FAQs
1. How will the Basis of Allotment be decided?
Subject to the provisions contained in the Letter of Offer, the Abridged Letter of Offer, the Rights
Entitlement Letter, the Application Form, the Articles of Association and the approval of the
Designated Stock Exchange, Company Board will proceed to Allot the Rights Equity Shares in the
following order of priority:
(a) Full Allotment to those Eligible Equity Shareholders who have applied for their Rights
Entitlements of Rights Equity Shares either in full or in part and also to the Renouncee(s) who has
or have applied for Rights Equity Shares renounced in their favour, in full or in part.
(b) Eligible Equity Shareholders whose fractional entitlements are being ignored and Eligible Equity
Shareholders with zero entitlement, would be given preference in allotment of one additional
Rights Equity Share each if they apply for additional Rights Equity Shares. Allotment under this
head shall be considered if there are any unsubscribed Rights Equity Shares after allotment
under (a) above. If number of Rights Equity Shares required for Allotment under this head are
more than the number of Rights Equity Shares available after Allotment under (a) above, the
Allotment would be made on a fair and equitable basis in consultation with the Designated Stock
Exchange and will not be a preferential allotment.
(c) Allotment to the Eligible Equity Shareholders who having applied for all the Rights Equity Shares
offered to them as part of the Issue, have also applied for additional Rights Equity Shares. The
Allotment of such additional Rights Equity Shares will be made as far as possible on an equitable
basis having due regard to the number of Equity Shares held by them on the Record Date,
provided there are any unsubscribed Rights Equity Shares after making full Allotment in (a) and
(b) above. The Allotment of such Rights Equity Shares will be at the sole discretion of the Board
in consultation with the Designated Stock Exchange, as a part of the Issue and will not be a
preferential allotment.
(d) Allotment to Renouncees who having applied for all the Rights Equity Shares renounced in their
favour, have applied for additional Rights Equity Shares provided there is surplus available after
making full Allotment under (a), (b) and (c) above. The Allotment of such Rights Equity Shares will
be made on a proportionate basis in consultation with the Designated Stock Exchange, as a part
of the Issue and will not be a preferential allotment.
(e) Allotment to any other person, that the Board may deem fit, provided there is surplus available
after making Allotment under (a), (b), (c) and (d) above, and the decision of the Board in this
regard shall be final and binding.
After taking into account Allotment to be made under (a) to (d) above, if there is any unsubscribed
portion, the same shall be deemed to be ‘unsubscribed’.
2. When will the Rights Equity Shares be credited to the demat account?
On or About June 11, 2020
3. When will the Rights Equity Shares get listed on the exchanges?
On or About June 12, 2020
4. Will the Rights Equity Shares trade along with the currently listed Equity Shares of the
Company?
Rights Equity Shares are partly paid up shares and will be allocated a separate ISIN. Hence, it will not
trade with the currently listed Equity Shares of the Company. It will trade separately. Once the entire
Call Money is raised and the Rights Equity Shares are fully-paid up, the Rights Equity Shares will
trade along with the currently listed Equity Shares of the Company.
On payment of the final Call in respect of the partly paid-up Rights Equity Shares, such partly paid-up
Rights Equity Shares would be converted into fully paid-up Equity Shares and shall be listed and
identified under the existing ISIN for fully paid-up Equity Shares of the Company.
5. Will Rights Equity Shares trade freely post listing?
Yes
6. When will next Call Money be payable?
Remaining Call Money will have to be paid, on one or more subsequent Call(s), as determined by the
Board at its sole discretion, from time to time
7. How to withdraw an Application made through ASBA or R-WAP platform?
An Investor who has applied in the Issue may withdraw their Application at any time during Issue
Period by approaching the SCSB where application is submitted or sending the email withdrawal
request to ril.rights@kfintech.com in case of Application through R-WAP facility. However, no
Investor, whether applying through ASBA facility or R-WAP facility, may withdraw their Application
post the Issue Closing Date.
FAQs for Shareholders holding Equity Shares in a physical form
1. Can shareholders holding Equity Shares in a physical form renounce their Rights
Entitlement?
In accordance with SEBI circular SEBI/HO/CFD/DIL2/CIR/P/2020/78 dated May 6, 2020, the Eligible
Equity Shareholders, who hold Equity Shares in physical form as on Record Date and who have not
furnished the details of their demat account to the Registrar or the Company at least two Working
Days prior to the Issue Closing Date, will not be able to renounce their Rights Entitlements.
2. Will share certificates be provided to shareholder holding Equity Shares in a physical form if
demat account is not provided?
No, share certificates will not be provided to shareholder holding Equity Shares in a physical form.
3. Why will physical share certificates not be issued to successful Allottees in Rights Issue?
In accordance with Regulation 77A of the SEBI ICDR Regulations read with the SEBI Rights Issue
Circulars, the credit of Rights Entitlements and Allotment of Rights Equity Shares shall be made in
dematerialised form only.
4. What is the process for the shareholders who have been allotted shares in the rights Issue for
getting the Rights Equity Shares in demat account post allotment?
In case of Allotment to resident Eligible Equity Shareholders who hold Equity Shares in physical form
as on Record Date, have paid the Application Money and have not provided the details of their demat
account to the Registrar or the Company at least two Working Days prior to the Issue Closing Date,
the following procedure shall be adhered to:
(a) the Registrar shall send Allotment advice and credit the Rights Equity Shares to a demat
suspense account to be opened by the Company;
(b) within 6 (six) months from the Allotment Date, such Eligible Equity Shareholders shall be required
to send a communication to the Company or the Registrar containing the name(s), Indian address,
email address, contact details and the details of their demat account along with copy of self-attested
PAN and self-attested client master sheet of their demat account either by post, speed post, courier,
electronic mail or hand delivery;
(c) Company (with the assistance of the Registrar) shall, after verification of the details of such demat
account by the Registrar, transfer the Rights Equity Shares from the demat suspense account to the
demat accounts of such Eligible Equity Shareholders;
5. How much time will it take to get the Rights Equity Shares credited in demat account for those
investors who have not provided their demat account details during issue period?
The Company (with the assistance of the Registrar) shall, after verification of the details of demat
account by the Registrar, within reasonable time initiate the process of transfer of the Rights Equity
Shares from the demat suspense account to the demat accounts of such Eligible Equity
Shareholders.
10. What is the last date for providing the demat account details for getting the Rights Equity
Shares Allotted in the Issue in such demat account?
Within 6 (six) months from the Allotment Date, Eligible Equity Shareholders shall be required to send
a communication to the Company or the Registrar containing the name(s), Indian address, email
address, contact details and the details of their demat account along with copy of self-attested PAN
and self-attested client master sheet of their demat account either by post, speed post, courier,
electronic mail or hand delivery for getting the Rights Equity Shares Allotted in the Issue in demat
account.
Search Terms: Reliance Industries' rights issue, trading as Reliance Industries-Rights Entitlement or RIL-RE on the National Stock Exchange,Reliance Industries Ltd's rights entitlement,Reliance Industries - Rights Entitlement (RIL - RE),Reliance Industries' (RIL's) mega rights issues,Reliance Industries- Rights Entitlement (RE), RIL rights entitlement ratio,
What is the basic difference between ETFs and Mutual Funds
What is ETF?
What is an ETF index fund?
What is an exchange traded fund?
Mutual Fund Vs ETF: Which is Right For You? ETF vs Mutual funds India
ETFs vs Mutual funds long term
ETF vs Mutual fund performance
ETF vs Mutual funds pros and cons
ETF vs Mutual fund vs Index fund
ETF vs Mutual fund vanguard
Best ETF in India
ETF or Exchange Traded Fund
ETF or Exchange Traded Fund is an investment fund which is traded on the stock exchange. The assets held under an ETF are commodities, stocks and bonds. These are traded for an amount close to the original net asset value of the asset, during a trading day. A bond index or stock index is tracked by most ETFs. The price of the ETF can vary throughout the day. Generally, ETFs have lower fees..read more>>
Mutual Funds
Mutual Funds are a professionally managed investment funds that trades in diversified holdings. Funds are pooled from various investors and invested with the assistance of professionals. The investment portfolio includes bonds, money market instruments, stocks or a combination of all. The investor owns a share of the mutual fund and reap the same benefits or ...read more>>
Difference between exchange-traded funds and mutual funds
ETFs trade throughout the trading day, like stocks, while mutual funds trade only at the end of the day at the net asset value (NAV) price. Most ETFs track a particular index and as a result have lower operating expenses than actively-invested mutual funds. Thus, ETFs may improve your rate of return on investments. In addition, ETFs have no investment minimums or sales loads, unlike traditional mutual funds, which often have both. Most indexed mutual funds, however, will not have sales loads.
Taxes and Rate of Return
ETFs create and redeem shares with in-kind transactions that are not considered sales. Thus, taxable events are not triggered. Redemptions create tax events in mutual funds, but they do not create tax events in ETFs.
Many investors that want to learn about exchange-traded funds (ETFs), try to find information about how they are different than mutual funds. But before going over the differences between the two, there are actually a few key similarities that are valuable to know.
Here's how mutual funds and ETFs are alike: Read more >>>
Indian market corrected sharply after making record high in November series. It failed to sustain and trade beyond that level. Today on 5th December, 2017 Nifty made low of 10,069 but Dalaal street's stock pundits believe it should pause here and should make upward journey soon. They believe a sustained trading above 10k mark and any short covering from this level can push indices to 10350 level again on account of AB=CD chart pattern on Nifty.
"Present post is for education purpose only and should not be taken as stock recommendation. The price targets mentioned in this post are given by respective brokerage houses, read disclaimer at the footnote of this blog page before making any position in the stock."
__________________________________________
Nifty likely to Hold 10k Support level; Best Stocks to Buy Now
Here is the top pick by market experts for handsome return;
"High dividend yield is an indication of lack of opportunities"
What is Dividend yield?
Dividend yield is a financial ratio indicating how much dividend is paid to it's shareholders each year in relation to the price of each share of the company. The dividend yield is expressed as a percentage and can be calculated by dividing the money value of dividends paid in a given year per share of a company held, by the market value of a share.
Why companies pay high dividend?
The main reason why companies pay high dividends is because management can not find better growth opportunities within its own company to invest its undistributed profits. As a result, management returns excess profits to shareholders in the form of dividends or share buyback. If a company pays a dividend equivalent to a 5% return, management is basically telling investors that they can not find better investments in the company that are more than 5%. Their growth will largely be determined by exogenous variables, namely the state of the economy.
To understand it in a better way let's consider following two cases;
1. Imagine that you are the CEO of a high-growth company like Tesla Motors (TSLA), the manufacturer of high performance electric cars. Do you think Elon Musk, the current CEO will start paying a dividend with his profits instead of resorting to research and development for new models with a longer battery life? Of course not! It would be absolutely pathetic if Elon Musk could not beat a 5% return on his capital. Tesla Motors is up 500% since its opening in mid 2010 and now Elon is a billionaire.
2. On the other hand, telecommunications company like AT&T (T) which has the largest wireless network in USA. According to Pew Research, mobile penetration is over 85% in USA , and AT & T has the largest subscriber base in the industry. Since AT&T is like a utility the generation of cash flow is high but accelerated growth prospect is low. Due to strong cash flow and the absence of better investment alternatives, AT&T pays a huge dividend of $ 1.80 per share, which equates to a 5% dividend yield with the stock To $ 35. AT & T has increased merely by 50% since the low of 2009 while S&P 500 increase by 140%.
I now hope you understand why high dividend yield should not be a single stock selection parameter.
Keywords;Dividend yield, high dividend stocks, growth stocks, dividend paying companies, avoid high dividend
Indians
appetite for gold is unbelievable. It doesn’t matter to us if the price sky
rockets, or if the Government imposes a ban or even if gold suddenly starts to
bite us! We need gold to survive. The price of gold is amazingly higher than
anyone ever had expected. Yet, the demand for it isn’t waning. India
consumed 963.1 tonnes of gold in 2010,which is likely to increase to 1200 tons by 2020.
With prices
all set to go higher, middle class Indians are opting for a way to bypass this
irritant. The new found love in Gold Purchase Plans is a reflection of
this.
Gold Purchase Plans Explained
So how does
a Gold Purchase Plans actually work? There are two ways in which these
plans operate;
1. Regular
Investment Method: In this
type of plan the jewelry companies accepts a regular monthly payment from
customers usually as low as Rs. 1000 for a period of 12 months to 24 months.
The customer is entitled to receive interest and bonus for the money invested.
Typically,
for a customer who pays instalment for one year gets one month bonus. For
example if you invest Rs. 1000 for one year your fund adds up to Rs 12,000.
However, with one month bonus you get extra Rs. 1000 increasing your fund
amount to Rs. 13,000. For two years investment some jewellers offer two month
bonus.
At the end
of maturity, the customer can opt for either gold coin for the amount or go for
gold ornaments. If the customer chooses gold ornaments the jewellers discount
charges on designing.
2. Systematic
Gold Investment Plan: Some
companies offers to credit an equal amount of gold to the customer’s account at
the price prevailing when an instalment is paid. On maturity she can purchase
the gold in the form of gold coins or ornaments. This way she can bypass
increasing price of gold if she buys gold at a later date.
SIP method
helps to average the cost of gold over the year. This is very useful as
prices are going up. However, it also helps the customer to buy up gold when
the price comes down on a correction. At lower prices more gold is
purchased and at higher price fewer amount of gold is bought. This helps in
averaging the cost of your gold purchase.
Overall, SIP method helps gold investors in the same manner as it helps investors in
equities.
To Know the magic of compounding in SIP must watch this video;
How Customers and Jewellers’ Benefits from Gold Purchase Plans
These plans
are provided by jewellers to attract more customers and make them spend more,
even if the prices are high. However it is a win-win situation with both
the consumer and the jeweller gaining from the transaction.
Benefits to Customer
1. Rupee Cost
Averaging: For the customer Gold Purchase Plans works like a Systematic Investment Plan. Every month she can invest a part of her income into this plan. At
maturity she gets gold worth the price of money invested. The money gains
interest and jewellers also provide bonus for the investment. This makes it a
good investment plan in gold especially for those who cannot pay at one go.
2. Helps Low
Income Group to Invest in Gold: Considering
the fact that gold is very important to our lives and is embedded in the
cultural psyche of the Indians, most of us are forced to invest in gold. Thus, it forces people with limited income to purchase gold formarriages and other occasions. With Gold Purchase Plans people with low income
can slowly make a corpus and purchase gold.
Benefits to Jeweller
1. Increased Flow of Money: A jeweller
is benefited by having a regular flow of money every month. This helps the jeweller
to buy gold and build inventory. Before the maturity date the jeweller can make
use of the money invested for other investments or expenditure.
2. More
Customers More Sale: More customers are attracted to jewellers who
provide attractive Gold Purchase Plans. Furthermore, the prospect of buying
lump sum gold through small systematic investments can make customer purchase
more than they would have otherwise. All this contributes to the overall sale
to rise thus profiting the jeweller.
Conclusion
Gold
Purchase Plans are a good investment. Gold is now not only a
hedge against inflation but is fast turning in to a safe investment asset. This makes it worthwhile to invest in gold in any form.
