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Will my buy average be affected if I sell shares from my holdings and buy it back the same day?

When you trade Intraday in shares which are already part of your holdings, your intraday trades will not affect your buy average calculation. This is because the intraday trades are considered as a separate transaction altogether since the stock doesn't actually move in/out of your demat account.

For example, you hold 50 shares of Reliance purchased at Rs 500, which you bought a couple of years back and is in your demat account. Assume, on today's date the price of Reliance is Rs 1000. Let's say you purchased 50 quantities of the share at Rs 1000 and sold it at 1010 within the same day. This intraday trade will not affect your buy average, it will continue to be Rs 500 as opposed to Rs 490.

Note 1 — Shares bought and sold the same day will be considered as Intraday trades irrespective of the trades being placed in CNC or MIS product types.

This way of calculating the Buy average is done after considering the tax implications of trades. As per IT Rules, any transaction which doesn’t result in delivery in/out of demat is considered as intraday, and all such transactions are considered speculative which has to be categorized separately. Intraday trades should not mix with delivery transactions, which are considered for capital gains. 

Check out this module on Varsity that explains all aspects of taxation that investors and traders need to be aware of.

Refer this post on TradingQ&A for more information regarding this.

However, the same won't be applicable for Trade to Trade stocks. The buy average will be the latest Buy price.

For example, you sold 50 shares of IBVENTURES-BE purchased at Rs 500, which you purchased a few years back and is in your Demat. 

Assume, on today's date the price is Rs 700. If you sell it for Rs 700 & buy it back the same day at Rs 690. The correct buy average will be the latest transaction price i.e. Rs 690 & not 700. Check out this article for a detailed explanation.