Capital Gains vs. Business Profits: Merely holding shares for a short period will not convert capital gain into business income. This would be contrary to be legislative mandate which itself provides that investment held for less than 12 months is to be termed as short term capital gain. If the assessee has two portfolios, one for “Investment” and other for “Trading” and if the investments are out of own funds and not borrowed funds, the gains have to be assessed as STCG
There is no concept of “inflation adjusted cost” for short term capital assets.
With regard to long term capital assets, it depends on the nature of securities and also the residential status.
Assuming you are an “ordinary resident”, indexation benefit (adjustment for inflation) would be given to basically every long term capital asset except for equity shares, units held in equity oriented mutual funds, units held in a business trust (REITs, INVITs), debentures, bonds etc.,
This is just an indicative list and not comprehensive, since there are many conditions specified for certain classes of capital assets.