Large institutional trades involving millions of shares can cause sudden, sharp price swings that often leave retail investors struggling to manage portfolio risk. In 2025, promoters, PEs- Private Equity firms, and VCs-Venture Capital firms sold shares worth ₹2.34 lakh crore through block deals on Indian exchanges (NSE and BSE), serving as a structured mechanism to handle these massive volume shifts. This specialised trading route addresses the challenge of high-volume liquidity by segregating large orders from the public order book. To understand the mechanics of these institutional movements, read this blog on what is a block deal in the share market.
What is a Block Deal?
A block deal is a single transaction of shares between two parties, typically institutional investors like mutual funds, insurance companies, or high-net-worth individuals, executed on a dedicated exchange window. According to SEBI regulations, a trade qualifies as a block deal only if it involves a minimum value of ₹25 crore. These trades are pre-negotiated between the buyer and seller and must be executed at a price within a specific range of the current market price. Unlike regular trades, block deals are separate from the public order book.
How Block Deals Work in the Share Market?
Executing a block deal in the share market involves a precise sequence of events to ensure the trade remains isolated from the retail order book while adhering to transparency norms. The process is as follows:
- Pre-negotiation: The buyer and seller (typically institutional funds or promoters) agree on the quantity and price privately before the session starts.
- Selection of broker: The parties coordinate with their respective brokers who are authorised to execute trades on the exchange’s dedicated block window.
- Order placement: Both brokers place the buy and sell orders simultaneously during the Morning (8:45 AM – 9:00 AM) or Afternoon (2:05 PM – 2:20 PM) windows.
- Order matching: Unlike regular trades, the exchange’s system only matches orders if the quantity and price are identical; partial matches are not permitted.
- Trade reporting: Once the trade is hit,it is immediately reported to the exchange’s surveillance and reporting systems for verification.
- Settlement: The shares are transferred and funds are settled on a T+1 or an optional T+0 basis, fulfilling the mandatory delivery requirement.
Block Deal Regulations in India
The execution of block deals follows certain SEBI guidelines to ensure they do not interfere with the standard price discovery process during regular hours of the. These trades are isolated from the continuous trading session and are governed by specific operational rules as follows:
- Morning trading window: This session operates between 8:45 AM and 9:00 AM, using the previous day’s closing price as the reference for the trade.
- Afternoon trading window: This session runs from 2:05 PM to 2:20 PM, with the reference price being the Volume Weighted Average Price (VWAP) of trades executed between 1:45 PM and 2:00 PM.
- Price band constraints: Orders must be placed within a range of ±3% of the applicable reference price for that specific window, providing more flexibility than the previous ±1% band.
- Minimum threshold: The minimum transaction value for execution in the block deal window is mandated at ₹25 crore to restrict the window to large-scale institutional trades.
- Mandatory delivery: Every block deal must result in the actual delivery of shares; SEBI strictly prohibits the squaring off or reversal of these trades.
- T+0 settlement integration: The revised framework allows block deals to be settled under both the T+1 and the optional T+0 settlement cycles.
- Post-trade disclosure: Stock exchanges must disseminate deal details, including the script name, client identity, quantity, and price, to the public after market hours on the same day.
How Investors Use Block Deals?
Investors monitor block deals as they serve as a barometer for institutional sentiment and long-term capital commitment. Since these transactions involve significant financial stakes, the patterns they reveal are often used in market analysis as follows:
- Institutional sentiment: Large entries by reputed global funds or domestic institutions often signal long-term confidence in a company’s fundamentals.
- Promoter activity tracking: When promoters use this window to increase their stake, it is generally interpreted as a sign of internal confidence in the business.
- Support and resistance levels: The price at which a massive block is traded often serves as a psychological support or resistance level for future price movements.
- Exit monitoring: Tracking when private equity firms or venture capitalists exit can help retail investors understand the maturity of a company’s investment cycle.
- Liquidity assessment: Frequent block deals in a specific stock can indicate rising market liquidity and interest from professional fund managers, potentially leading to more stable price action.
- Portfolio positioning: Investors use the end-of-day disclosures to identify which sectors are attracting institutional interest, helping them align their own portfolios with broader market trends.
Advantages and Disadvantages of Block Deals in India
Block deals are designed to provide a stable environment for large-scale transfers of ownership. While they offer significant benefits for market stability, they also present certain limitations for the broader investing public.
Advantages
The specific benefits provided by the SEBI-regulated block deal mechanism are:
- Volatility mitigation: By segregating massive orders into a separate window, the market avoids the price shocks that would occur if these orders hit the regular trading screen.
- Efficient execution: Institutional participants can complete large trades at a single, predictable price without the risk of partial fills at varying price points.
- Transparency and accountability: Mandatory same-day disclosures ensure that the public is fully aware of major shifts in a company’s shareholding pattern.
- Reduced slippage: Participants avoid the impact cost or slippage that typically erodes the value of a large trade executed in the open market.
Disadvantages
Despite these benefits, the mechanism also presents several disadvantages such as:
- Exclusion of retail participants: The high minimum entry barrier of ₹25 crore ensures that the window remains exclusive to institutions, leaving retail investors unable to participate in these specific price points.
- Short-term sentiment shifts: While the trade itself is separate, the public announcement of a major stakeholder exiting can sometimes trigger a delayed panic among retail traders.
- Pricing rigidity: The strict ±3% price band may prevent trades from occurring during periods of extreme market-wide volatility if buyers and sellers cannot agree within the limited range.
- Information asymmetry: Because details are released only after market hours, retail investors may spend the day trading without knowledge of a significant institutional movement.
Examples of Block Deals in Share Market
The cases below show how block deals facilitate massive ownership shifts destabilising the broader exchange. Notable examples of such high-volume trades are:
- Rain Industries (January 6, 2026): In a recent strategic accumulation, First Water Fund acquired 26 lakh shares at a price of ₹120 per share. This transaction involved a coordinated buy from individual sellers, reflecting institutional interest in the sector through a single, large-scale trade.
- ITC Ltd (June 2023): A substantial block deal valued at approximately ₹1,800 crore took place when a global fund decided to offload its stake. While the separate window protected the market from a crash, the stock experienced brief sensitivity as the market digested the scale of the exit.
- Pine Labs: Following its listing in late 2025, institutional players utilised the block window for seamless swaps. For instance, Morgan Stanley purchased 14 lakh shares from UBS at a price of ₹257.5 each, demonstrating how inter-institutional shifts are managed post-IPO.
Conclusion
Simply put, the block deal mechanism serves as a vital bridge between large-scale capital needs and overall market harmony. By isolating substantial shifts in ownership, the exchange ensures that high-volume liquidity does not disrupt the daily experience of smaller traders. Knowing what is a block deal in the share market empowers you to identify significant institutional footprints and align your observations with the strategies of the market’s largest participant.
FAQs
A block deal is a single high-value transaction of at least ₹25 crore, executed between two parties on a dedicated exchange window to prevent market distortion during regular trading hours.
Unlike regular trading, block deals occur in separate 15-minute windows with a pre-negotiated price within a ±3% band, ensuring large volumes don’t impact the public limit order book price.
Institutional investors use them to buy or sell massive quantities efficiently. This avoids impact cost, where a large open-market order would unfavorably drive the share price up or down.
They maintain market stability by preventing extreme volatility, offer execution certainty for institutions at a fixed price, and provide transparency through mandatory end-of-day public disclosures of major ownership shifts.
SEBI regulates these via specific circulars, mandating dedicated morning/afternoon windows, strict ±3% price bands, and 100% delivery. Exchanges must publicly disclose all deal details after the market closes.
According to the 2025 SEBI framework, a transaction must have a minimum value of ₹25 crore to qualify. Previously, the threshold was 500,000 shares or a minimum value of ₹10 crore.
