I have stock and I want to buy some more share of same stock…but the price showing average price…so my previous holding share profit goes down after doing share price average…so can I sell share seperately on the basis of previous holding stock purchased that I bought former?
The concept of average is only statistics for you as an investor to know.
Jan 20 - Stock A 100 shares at 100 = 10000 -= Your average is 100 per share
Feb 20 - Stock A 100 shares at 50 = 5000. So your average cost is 15,000 / 200 = 75.
Mar 20 - Stock A 100 shares at 25 = 2500 = So your average is 17,500/300 = 58.33.
It goes on like this. However when you sell 100 shares, Capital gain will be computed against the first 100 shares which you bought at 100 per share. Example if you sell 100 shares at 75. You would have incurred a capital loss of 25 per share as the first share was bought at 100 although your average is 58.33.
After the sale, your average will be
17500 minus 7500 = 10,000 / 200 = 50 per share
Ok…means that it will work as FIFO method(first in first out)…
yes you are right
yes it follows FIFO when you sell shares and profit/loss is calculated on that basis only