A large-scale trade, involving thousands of crores, can shake market prices and trigger volatility, but that’s where block trades come in.
Block trade allows bulk transactions to be executed in a single go, away from the regular market, by which massive buying or selling doesn’t distort the stock’s price, ensuring stability while big investors quietly shift their positions.
Read further to understand what block trade is and how it works to prevent distortion in regular market movement.
What is Block Trade?
A block trade is a large, privately negotiated transaction for a large number of securities that is executed outside of the regular, public stock market to avoid influencing the prices.
These trades are usually conducted by institutional investors like mutual funds and hedge funds, and the price for these trades is agreed beforehand between the buyer and seller.
For instance, shares of Kotak Mahindra Bank were recently in focus when Japan’s Sumitomo Mitsui Banking Corporation (SMBC) offloaded its entire 1.65% stake (on Sep 11,2025), worth about ₹6,256 crore, through block deals that attracted global and domestic investors.
Key Features of Block Trades
- Large-scale Trade: The block trades involve a large number of shares or a high market value, and a minimum order size of ₹25 Cr is required.
- Institutional Investors & Private Negotiation: The block trades are privately negotiated by institutional investors like mutual funds and hedge funds, away from the public exchange to prevent market impact.
- Minimised Market Impact: The execution of these large trades off the public screen helps in avoiding drastic price fluctuations or slippage.
- Confidentiality & Use of intermediaries: The trades are facilitated by brokers, and the details of the trade are kept private until the transaction is executed, to prevent market speculation based on the information.
How Block Trades Work in the Stock Market
- Identification of need: An institutional investor, such as a mutual fund, identifies its needs to buy or sell a large block of securities and then contacts a specialised broker or investment bank.
- Counterparty search: The broker finds a suitable counterparty for the trade, either another institutional investor or a dealer willing to take the other side of the transaction.
- Private negotiation & Execution: The buyer and seller privately negotiate the terms of the trade, mainly the price, away from the public market, and execute the trade through the intermediary.
- Post-trade reporting: The completed trade is then reported to the stock exchange, which is a regulatory requirement to ensure transparency in the market.
Difference between Block Trades and Regular Trades
| Aspects | Block Trades | Regular Trades |
| Volume | It involves significantly large quantities of stocks, minimum ₹25 Cr. | It deals in smaller quantities, determined by individual investors and are not subject to a minimum volume threshold. |
| Execution | These are privately negotiated and executed between parties, through brokers or investment banks, in a trading window to avoid disrupting the open market. | It is executed directly on the public exchange during regular market hours. |
| Participants | It involves institutional investors like mutual funds, pension funds, hedge funds, and high-net-worth individuals. | It involves a wide range of investors, including retail investors. |
| Market Impact | It has minimised market impact due to private negotiation and off-exchange execution. | It can cause price fluctuations because they occur on the open market. |
| Transparency | It is less transparent to the general public because they are negotiated privately | It is more transparent as the trades are visible on the exchange’s order book. |
| Purpose | It is done to manage large portfolios, meet large withdrawal demands, or make strategic changes without affecting the stock price. | It is done to buy or sell securities as needed by individual investors. |
Benefits of Block Trades
- Minimised Market Impact: It provides the ability to buy or sell a large volume of securities to institutional investors without causing significant price fluctuations in the public market, and prevents price slippage.
- Execution Certainty & Efficiency: The terms such as price, volume, and timing are privately negotiated and agreed upon in advance, which offer greater certainty of the trade’s execution.
- Liquidity Provision: The block trades provide liquidity when large investors need to move a large position but cannot find enough buyers or sellers at the market price in the public market.
- Better Terms & Pricing: The direct negotiation process leads to more favorable pricing or terms than what might be available on a public exchange, especially for illiquid securities.
Risks and Considerations
- Counterparty & Liquidity Challenges: For a block trade, finding a counterparty for an extremely large trade can be challenging, especially for less liquid stocks or during volatile market conditions.
- Less Transparency: The block trades occur outside the public order book, which can reduce real-time transparency and impact the price for other market participants, like retail investors.
- Regulatory Scrutiny and Compliance: The block trades are subject to specific regulations and reporting requirements, which require full compliance to avoid legal issues and penalties.
- Broker-Dealer Risk: The intermediaries involved in the trade take on risk by committing to a price before finding an offsetting buyer or seller, which makes them subject to losses from market movements.
Regulatory Guidelines for Block Trades in India
This framework, implemented by SEBI, regulates block trades in the Indian stock market:
- Block Deal Window: Block trades can be executed in two sessions, the morning block deal window from 8:45–9:00 AM and the afternoon window from 2:05–2:20 PM.
- Price Band: The orders shall be placed within ±3% of the applicable reference price set for each window to maintain price stability.
- Minimum Trade Size: The block deal must be valued at a minimum of ₹25 crore, to ensure it’s limited to large institutional trades.
- Transparency: After market hours, the exchanges must publish trade details like stock name, client, quantity, and traded price for transparency.
- Surveillance: The stock exchanges, clearing corporations, and depositories must implement regular trading, settlement, and risk control standards for block deal windows.
How to Identify Block Trades on the Stock Exchange
- Track Block Trades window: The exchanges have specified times, designed to accommodate large transactions, for block trades, that is, the morning and afternoon windows in India, which are not available to retail investors.
- Look for Large volume: A block trade is a single transaction that exceeds a certain size threshold. Therefore, a sudden increase in traded quantity in a single transaction, ₹25 crore or more, during block deal windows signals a block trade.
- Market Reports and News Feeds: The brokers are required to report block deals to the exchange after they have been executed. So, keeping track of the market and news helps to identify such transactions early and understand their impact on stock prices and investor sentiment.
- Specialised software and alerts: Investors can use software to receive real-time alerts when block trades occur for specific stocks or asset classes. This software can help in spotting large institutional activity that may not be immediately visible on standard order books.
Conclusion
Block trades are for large investors to execute big transactions efficiently without disrupting the market prices. It is regulated by SEBI, which promotes stability, transparency, and liquidity in India’s stock market.
While offering advantages like minimal market impact and better pricing, block trades also demand strict compliance and careful negotiation between institutional participants. Understanding their structure helps investors interpret market movements with more clarity.
FAQ‘s
Block trades are large, privately negotiated transactions between institutional investors, which are executed outside the regular market to avoid sudden price movements and ensure stability.
Block trades are usually considered good, as they enable large investors to trade efficiently without causing volatility. However, multiple block deals in the same stock can sometimes indicate significant portfolio shifts.
Block trades are privately negotiated, large-volume deals executed in special trading windows with minimal market impact, unlike regular trades visible on the open exchange.
Investors can view block trades data on NSE and BSE websites under the Market Data → Block Deals section, published after the market hours.
Institutional investors such as mutual funds, hedge funds, pension funds, and high-net-worth individuals who meet SEBI’s minimum ₹25 crore threshold usually participate in the block trades.
Block trades allow large trades without disrupting prices, ensure execution certainty, provide liquidity, and offer better pricing through direct negotiation.
While individual block trades don’t usually impact stock prices, however, repeated large transactions or those involving major investors can influence market perception and sentiment.
After the block trades are executed, the brokers report the trade to the stock exchange, with the details, such as stock name, volume, and price, to disclose publicly after the trading hours.
Yes, block trades are legal and fully regulated by SEBI in India, which defines trade size, timing, price limits, and disclosure rules to maintain fairness in the stock market.
