How are stocks sold when selling MTF holdings?

When you hold both delivery (CNC) and MTF (Margin Trading Facility) holdings in the same stock, your oldest holdings will be sold first when you square off any position/holdings, regardless of which product type you're trying to sell from. This follows the FIFO (First In, First Out) principle as required by the Income Tax Department (ITD).

Example scenario

Let's say you make the following transactions:

1. January 1: You buy 10 shares of Reliance as delivery (CNC) at ₹1,350.
2. January 15: You buy 10 shares of Reliance as MTF at ₹1,300.
3. January 20: You decide to sell 10 shares of Reliance in MTF when the price is ₹1,320.

According to FIFO, your January 1 purchase will be sold first, not your MTF holdings. This results in a loss of ₹30 per share instead of the ₹20 profit you might have expected.