Your buy average remains unaffected when you sell shares from your holdings and buy them back on the same day. Intraday trades of shares from your holdings are considered separate transactions since the shares do not physically move in or out of your demat account.
Example scenario
- You purchased 50 shares of Reliance at ₹500 in 2021 and currently hold them in your demat account.
- The current trading price of Reliance is approximately ₹2500.
- You sell these shares at ₹2500 and buy them back on the same day for ₹2400.
- Your buy average will still remain at ₹500.
The intraday trade will not impact your original buy average.
Why buy average remains unchanged
Your buy average calculation considers the tax implications of trades. According to income tax rules, any transaction that does not result in delivery in or out of demat is classified as intraday and is considered speculative. Such transactions must be categorised separately from delivery transactions, which are evaluated for capital gains.
This rule does not apply to Trade to Trade or T2T stocks since your buy average will be the latest buy price for these stocks.