Bulk and block deals surged to Rs 98,353 crore in August, the highest monthly value in more than two years (26 months), as the expiry of lock-in periods for recently listed companies and a recovery in market sentiment opened the door for large shareholders to pare stakes.
The value of such transactions more than doubled from the previous month, according to data shared by Prime Database. August was also an exceptional month historically: Since January 2006, only June 2024 and March 2017 have recorded a higher value of bulk and block deals.
“The release of lock-in of stocks listed in the last 12-18 months has led to an increase in bulk and block deals as funds rebalance their portfolios,” said Venkatraghavan S, managing director – equity capital markets at Equirus Capital.
Pranav Haldea, managing director of Prime Database, said the recent run-up in valuations of mid- and small-cap stocks, even as headline indices remained range-bound, had made it attractive for existing shareholders to sell part or all of their holdings.
Anupam Tiwari, head – equity at Groww Mutual Fund, said deal activity had slowed in previous months amid volatility and uncertainty triggered by the West Asia conflict. Investors also preferred to wait for the June-quarter earnings season and a recovery in the markets before committing capital, with activity subsequently picking up sharply in August.
Domestic mutual funds and foreign portfolio investors (FPIs) emerged as the biggest buyers in August. Of the Rs 74,579 crore worth of transactions for which investor-level data was available, mutual funds bought shares worth Rs 18,842 crore, while FPIs purchased Rs 14,995 crore. Together, the two institutional categories accounted for about 45% of the purchases for which investor details were available.
Venkatraghavan said FPI participation in such transactions has also been driven by the relatively smaller allocations they receive in initial public offerings, prompting them to build positions after companies list.
Tiwari said the growing presence of mutual funds in bulk and block deals reflected their increasing scale in Indian equities. As assets managed by large fund houses have expanded, so too has their capacity to participate in large transactions.
For FPIs, he said, block deals provide an opportunity to build meaningful exposure to mid- and small-cap companies where acquiring large quantities of shares through regular market trading can be difficult because of limited liquidity. Anchor allocations and bulk transactions therefore offer institutional investors a route to accumulate sizeable positions.
Haldea said strong mutual fund participation also reflected the steady flow of household savings into the industry through systematic investment plans (SIPs), leaving fund managers with substantial capital to deploy.
Other investors — including Hindu Undivided Families, foreign companies other than FPIs and Indian companies — bought shares worth Rs 10,233 crore. Non-promoter individuals accounted for another Rs 1,369 crore of purchases.
The surge in large deals has revived a broader debate over whether rising household participation in equities is increasingly providing an exit route for promoters and other large shareholders, without translating into proportionate gains for benchmark indices.
Venkatraghavan, however, rejected that interpretation. He described the rise in block deals as a natural consequence of the financialisation of household savings, with growing mutual fund inflows being deployed into available investment opportunities.