MFs lag behind in bulk deal segment
YOGESH MEHENDALE
Mumbai
May. 12: The involvement of mutual funds in the bulk deal segment is much lower than expected at only
three per cent from 2006 till April 2009.
During this period, the total bulk deal transactions in the stock markets were valued at about Rs 5,00,500
crore in which the bulk deal transactions by the mutual funds were only Rs 15,500 crore.
During the same period there were only 1,448 bulk deal transactions by the mutual funds of a total of
92,237 bulk deal transactions. This signifies that the other classes of investors such as FIIs, promoters
and HNIs dominate the bulk deal segment.
In the bulk deals, investors purchase large chunks of a particular stock in one shot at a fixed negotiated
price. Otherwise, investors need to purchase those shares from the open market where the shares of a
particular scrip might not be available in large chunks and the cost of the shares also keep varying.
Explaining the overall scenario, Mr Jagganadham Thunuguntla, equity head of SMC Capital, said: \"In
the year 2006, bulk deals of Rs 1,41,600 crore were executed in which the share of mutual funds was Rs
5,300 crore. During 2007, the value of bulk deals done by mutual funds was Rs 5,900 crore in the total
bulk deals valued at Rs 1,91,700 crore. In the year 2008 as well, the mutual funds’ bulk deals were
valued at Rs 3,700 crore of the total bulk deals valued at Rs 1,36,400 crore. In the first four months of
2009, mutual funds struck bulk deals valued at Rs 700 crore of the total bulk deals valued of Rs 30,800
crore.\"
Mr Thunuguntla further said: \"Mutual funds might be choosing to refrain from bulk deals to keep their
investments confidential.\"
It is a general perception that the mutual funds are more active in the bulk deals segment but the data
shows that FIIs, promoters and HNIs are far more active in bulk deals than the mutual funds, he added.
Mr Waqar Naqvi, CEO of Taurus Mutual Fund, said: \"We prefer to invest in liquid stocks. Most of the bulk
deals take place in the illiquid stocks that are not part of the Sensex or the BSE 200 index.\"