Following billions of dollars' worth of negotiated trades in public stock, promoters, big private equity firms, and international investment funds are matching the recent spike in India's equities indexes in both the frequency and quantity of block deals. Through block trades on stock exchanges, shares valued over ₹55,000 crore, the greatest amount in a month, have changed hands thus far in March. This indicates the country's evolving equities culture, which was previously heavily dependent on foreign money for price support.
Block deals of ₹41,200 crore were completed in February, while deals totaling ₹53,000 crore were completed in December 2023.
The seamless completion of these transactions allays long-standing worries about Mumbai's capacity to manage huge stock trades without precipitating severe price disruptions that would have taken weeks to resolve.
The co-head of Bank of America's India Investment Banking, Raj Balakrishnan, stated, "The Indian capital markets are extremely resilient, driven by strong domestic and international flows."
"It is a fundamental 'buy' based on conviction around the continuation of the strong economic growth we have witnessed over the past few years," said Balakrishnan.
Block trades are share exchanges via a separate stock exchange window between big-ticket investors, including institutions with significant portfolios. As a result, the parties can sell off substantial amounts of shares without upsetting the primary market.
Recent developments indicate that fundraising is no longer exclusively the domain of major institutional investors, as several promoters have taken advantage of the surge in Indian shares to exit their investments.
In a transaction valued at Rs 17,485 crore, British American Tobacco Plc (BAT) sold a 3.5% interest in ITC, a leading cigarette company, on the open market, making it one of the largest block deal transactions in Indian capital market history. Tuesday saw the sale of 23.4 million shares in India's largest software services exporter by Tata Sons, the parent company of Tata Consultancy Services (TCS), for a minimum price of Rs 9,300 crore.
According to bankers, the ability of prominent investors, such as private equity firms and promoters, to carry out sizeable exits highlights the allure of the Indian capital markets even more.
According to Balakrishnan, a sizable amount of institutional money, both local and foreign, is searching for chances to acquire sizable stock positions. The fact that a $2.1 billion ITC block might be completed inside the timeframe with a discount of less than 1% serves as an example of this.
In March, shares valued at around Rs 30,300 crore were purchased by domestic institutional investors (DII) and Rs 32,000 crore by foreign portfolio investors (FPI).
According to market participants, in order to avoid the price swings of the conventional secondary market, both FPIs and DIIs are demonstrating a great lot of interest in conducting agreements within this block deal window.
"Considering the macro and micro fundamentals, Indian markets are still fairly robust," stated Rahul Saraf, head of investment banking at Citi India, which has led five block sales in the last five weeks, selling $3.9 billion worth of shares. Renowned long-only investors hold over 80% of the stock across blocks, with equal contributions from international and local funds."
