Did you know that retail investors are at a major disadvantage when it comes to analyzing bulk deals data? Most of the time they are helplessly staring at bulk deals in plain vanilla tabular format, struggling to derive actionable insights from the boring data table.
Here are some pain points that retail investors face when trying to analyze bulk deals data:
If you too are feeling stuck and unable to extract valuable insights, then let me assure you: by the time you reach the end of this article, you will feel empowered. You will gain a fresh perspective and the knowledge necessary to confidently analyze bulk deals and extract valuable insights from it.
Let's start with the tidbits on what are bulk deals and why analyzing them is important.
Bulk deals are transactions in which a large number of shares of a stock are bought or sold, typically by institutional investors or high net worth individuals. These transactions are typically reported on stock exchanges, and the information is often available through financial news outlets and websites. More specifically:
Bulk Deal means any stock market transaction that involves buying or selling of at least 0.5 per cent of the number of listed shares of a company whereas Block Deal means a single transaction of a minimum quantity of 5 Lakh shares or a minimum value of Rs 5 crore between two parties which are mostly big institutional players.
Analyzing bulk deals data can be an important part of a successful investment strategy, as it can provide valuable insights into the market sentiment and help investors identify trends and opportunities. At times, it offers a sneak peek at the smart money. These transactions can be an indicator of market sentiment, as large investors often have access to information and resources that smaller investors do not. By analyzing bulk deals data, retail investors can gain a better understanding of the market and make more informed investment decisions.
Bulk deals doesn't always mean an up move or down move in stock price in a shorter time frame. However, a closer look at the nature and financial might of participants involved in the deal can act as a leading indicator of where the prices are headed in medium to long term.
For example, if a big Mutual Fund or FII/FPI buys a particular stock in a bulk deal where the deal has happened in multiple transactions (means no single large seller) then, probabilistically speaking, chances of future price appreciation gets higher. Having said that, investors must not solely base their decision on the data of block deals and bulk deals. They should study the fundamentals of the company and its past performance before making an investment decision. Having understood the implications, here is the data of latest bulk and block deals:
Identifying potential investment opportunities using Bulk Deals data:
By examining the frequency and value of bulk deals over a certain period of time, you can identify trends in the activity of certain stocks or types of entities. For example, you may notice that a particular stock or a group of stocks from a sector have undergone an increase in bulk deal activity in recent weeks. This may indicate increased interest in the stock or the sector as a whole. Do you want to have a look at the most active stocks that appeared in last one week bulk deals along with emerging sectors of interest? Here you go:
By analyzing the transaction type (buy or sell) and the value of shares traded, you can get a sense of the sentiment of the entity executing the trade. For example, a large volume of sell transactions could indicate negative sentiment towards the stock, while a large number of buy transactions could indicate positive sentiment. Here is Stock wise Weekly Bulk Deals by transaction type (number of buy or sell transactions).
A pro tip: the chart below could be pretty handy in detecting accumulation and distribution of a particular stock. Say you see a large number of buys, but not matching number of sell transactions for a particular stock. What it might mean is - there were few large buyers (reported buy transactions) who bought from small sellers (missing sell transactions as small so not reported in bulk deals). This is a sign of accumulation. Similarly, if you see a large number of sells but not matching number of buy transactions for a particular stock, then it might mean - there were few large sellers (reported sell transactions) who sold to small buyers (missing buy transactions as small so not reported in bulk deals). This is a sign of distribution. Having said that, it is important to note that the number of bulk deals is just one factor to consider when trying to determine the accumulation or distribution of a stock. Other factors, such as the volume of shares traded and the price movement of the stock, can also provide valuable information. Spend some days with the chart below and sooner than later, it will start speaking to you.
Market manipulation detection:
You must have heard about market manipulation. Bulk deals analysis could be pretty handy in market manipulation detection. How?
One way in which bulk deals data analysis can be used to detect market manipulation is by identifying unusual trading patterns that may indicate manipulative activity. For example, if a particular security is experiencing a large number of bulk deals in a short period of time, this could be a red flag that the security's price is being manipulated. Similarly, if the volume of bulk deals for a security is significantly higher or lower than usual, this could also be an indication of manipulative activity.
Another way in which bulk deals data analysis can be used to detect market manipulation is by identifying unusual concentrations of trades among a small group of traders. If a small group of traders is consistently executing bulk deals in a particular security, this could indicate that they are working together to manipulate the security's price.
Have a look at the client wise activity below and see if you can spot such activities in any stock. Having a good pair of eyes could save you from some grave investing mistakes.
Insights into insider trading:
By analyzing bulk deal data, it is also possible to identify potential instances of insider buying or selling. Here is another pro tip: Insiders have to report their buying/selling activity to the exchanges and they have to do it within a defined time frame (within 1 week of trade execution). However, the bulk deals are reported on the same day. So any substantial activity by insiders more often than not gets reflected in the bulk deals first and then in insider trading data after delay of 1 to 7 days. If you want to do a deep dive into insider trading, you can do it here.
Identifying potential warning signs:
Analyzing bulk deal data also enables you to identifying potential warning signs. A high volume of sell transactions with decreasing price per share is one of them. Another key warning sigh is high frequency of appearance in bulk and block deals. Here is a list of top 50 stocks that are frequently traded in the nifty bulk deals and nifty block deals. You surely can spot some well known wealth destroyers in the list. Specifically speaking, investors should be cautious while investing in stocks with weak fundamentals which trade frequently in nse bulk deals and nse block deals as they might be operator driven stocks.
Historical Bulk Deal Analysis
You can unlock few actionable secrets with the Historical Bulk Deal Analysis. By filtering through NSE bulk deals and block deals, you can discover which shares are being bought and sold by top investors such as FII, FPI, DII, and Mutual Funds. Use the Date, Company, and Mutual Fund/FII/FPI filter below to uncover valuable insights and avoid operator-driven counters that may lead to investment disasters. This data is updated every EOD and can be independently verified at at NSE India website.
Playing devils advocate:
Overall, bulk deal analysis can be a useful tool for investors, but it should be used in conjunction with other forms of analysis, such as fundamental and technical analysis, in order to gain a more comprehensive understanding of a stock's performance and potential. The following pointers are not to discourage you from believing the potential of bulk deals analysis, but to keep a check on reckless behavior of jumping on any and every stock that appears in bulk deals.
Why you must not solely rely on Bulk Deals data?
Conclusion: How to interpret bulk deals data?
Investors should monitor nse bulk deals and nse block deals on a daily basis and keep a watch on following data points
- Look for stocks with strong fundamentals which are appearing on a regular basis in the bulk deals and block deals. If big institutions are consistently buying stocks with strong fundamentals in large quantity then it’s a good indicator of future price appreciation. Similarly, if the large institutions are selling stocks on a consistent basis, then one can be fairly sure of future price depreciation.
- Look for stocks with very weak fundamentals consistently appearing in the bulk and block deal list. They might be operator driven and investors should double check their decision before investing in them
- Study the profile of financial institutions involved in the nse bulk deals and nse block deals. Huge buy or sell figures by big institutions are often backed by solid research and may indicate the future price movement fairly accurately.
- The bulk deal activity can also act as a fair indicator of prevailing market sentiment. If the overall market sentiment is bearish, bulk deals on the sell side will be relatively large and if the market sentiment is bullish, buy bulk deals will outnumber the sell bulk deals.
I will leave you here as there is quite a lot to digest. Initially, the amount of data might feel a bit overwhelming, but trust me, the time you invest in understanding the data will pay off in spades. Go ahead, dive in, and let's see how far we can take your investments together.