Will my average buy price be affected if I sell shares from my holdings, and buy it back on the same day?
Intraday trades in shares that are part of your holdings will not affect your average price, as the stock doesn't actually move in or out of your demat account.
For example, Mr John bought 100 shares of Tata Consumer Products at Rs. 500 per share.
Scenario 1: On another day, he purchases 100 shares of Tata Consumer Products at Rs. 700 per share, under the intraday product. Hence, the intraday and cash trades will be shown as separate line items in his Portfolio, as given:
| Product | Stock | Quantity | Average Cost |
|---|---|---|---|
| Cash | Tata Consumer Products | 100 | 500 |
| Intraday | Tata Consumer Products | 100 | 700 |
Scenario 2: On another day, he purchases 100 shares of Tata Consumer Products at Rs. 700 per share, under the cash/delivery product.
- In this case, as soon he purchases these 100 shares, the average cost will be shown as 600 i.e., ((100 * 500) + (100 * 700)) / 200.
- If he sells the newly purchased 100 shares on the same day, the sale will be adjusted against the day's purchase. Hence, the average price in his Portfolio will show as Rs. 500 from the next trading day (from the initial purchase).
- If he sells the newly purchased 100 shares on the same day at Rs. 800 per share, his realised profit & loss is calculated on the average price of Rs. 600, and not today's buy price of Rs. 700 (i.e., (800-600) * 100 = Rs. 20,000). Whereas, his actual profit & loss calculated at the end of the day is Rs. 10,000 ((800-700) * 100). This will automatically be rectified after the end-of-day activities.
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