If I sell my holdings intraday and buy them back at the end of day and try to hedge my holdings very often, will it affect the categorization of my holding, i.e, can i still claim long term holding benefits?
This would be considered intraday trades and since you are trading frequently, profits from such trades will be considered a business income. More on taxations here.
This won’t have any effect on your long term holdings.
There is Exclusion to Speculative transactions if you hold shares in 43(5). You can still claim capital gain if transactions are few :-
(5) “speculative transaction” means a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips:
Provided that for the purposes of this clause—
(b) a contract in respect of stocks and shares entered into by a dealer or investor therein to guard against loss in his holdings of stocks and shares through price fluctuations; or
© a contract entered into by a member of a forward market or a stock exchange in the course of any transaction in the nature of jobbing or arbitrage to guard against loss which may arise in the ordinary course of his business as such member; or