If I sell and buy the same shares, will I need to pay a penalty if all of my orders are CNC?
This is the sequence of events:
- I don’t have any funds as margin
- I have 100 shares of A in my DEMAT account. I sold them at Rs. 500 each. I got 80% of sale proceeds as margin, which is 40,000
- I bought 80 shares of A at Rs. 500 using 40,000 margin
- Now, Zerodha treats this situation as if I have sold 20 shares of A since I have re-purchased 80 of the 100 shares that I sold. And it shows a margin of 8,000, which is 80% of the value of 20 shares that Zerodha considers that I have currently sold.
- With the 8,000 margin, I bought 16 shares of A at Rs. 500.
- Now Zerodha assumes that I have sold 4 shares of A because I have re-purchased 96 shares. It shows a margin of 1600. With that margin, I bought 3 more shares of A at Rs. 500.
- Zerodha thinks I have sold just 1 share, and gives me Rs. 400 as margin. I added Rs. 100 to my funds and then I purchased one more share of A at Rs. 500.
- Now I have sold and re-purchased all the shares that I had.
Am I violating peak margin requirement in this case? My reading of This article by @nithin is that I will have to pay a penalty. Please clarify.