After selling my stock from holdings using product type as CNC I am seeing a -ve (sell position) in the positions page. The P&L for this is also changing, I am very confused, what should I do?
Many traders sell their holdings during the day and use those funds to do other intraday trades, and then buy back the stock before the end of the day. They don’t want their holdings to change because capital gain taxes are lower for investments.
Showing such CNC sell trades in positions makes it easier for traders. They can also see the MTM profit/losses on this together with all their other intraday trades.
If you don’t intend to buy back the stock before the end of the day after selling, disregard the changing P&L for the CNC/stock sold showing up in positions page. It doesn’t make any difference to you.
Not a big deal this P&L will not be there in the next day.
When shares are sold from your demat account, you have to first confirm on the Holdings page if the holdings quantity has been debited. If it is debited, then this indicates that your holdings have been sold at your selling price.
If you are on the Positions page, you have to confirm if your Position was sold under product type CNC. If yes, then your holdings have already been sold at your selling price. You can ignore the fluctuation in the PNL on the Positions page for your Sold CNC shares as this is irrelevant to you.
As for why we allow the PNL to fluctuate in the Positions page even for CNC trades, here is why. Several traders use their Holdings value as margin to execute intraday trades. This can be achieved by selling Holdings, using the instant cash credit in the trading account to execute intraday trades and then buying the sold Holdings back before market closes. Traders keep their Holdings intact at the end of the day because there are no capital gain taxes on investments held for over a year.
Showing such CNC sell trades in positions makes it easier for traders to see the MTM profit/losses on their Holdings Sell position before they buy it back.
@BharatW But if these trader are incurring a profit or a loss on there CNC position then what are there course of action?
How are they benefited by being aware of this?
If the market is in an uptrend, then good quality stocks will move up in the long term. Even in an uptrending market, there will be corrections and dips. For a trader who is able to spot these correction days and who is also holding stocks in demat, he can sell the stocks from Holdings at a higher price and then buy these stocks back at a lower price after the dip before the market closes on the same day.
The trader will make an intraday profit and the Holdings in the demat will still be intact at the initial buy price.
If this happens in a reverse situation where when Holdings are sold and the price of the Holdings go up during the trading day, then this will lead to an intraday loss when the Holdings are bought back at a higher price.
So the indicative P&L is just for those traders who do these types of trades and informs them about the profit/loss made on that particular trade.
Thanks for clearing doubts to all of you.
How can i exit (sale) my holding stocks… When I’m selling my holding stocks every time new order has placed n showing in position… What is issues
If the trader makes an intraday profit, the Holdings in the demat will still be intact at the initial buy price.
However, if the reverse happens, will the Holdings in the demat will still be intact at the initial buy price?
Yes, that’s correct.
if you sold and bought back at a higher price on the same day, then it leads to an intraday loss. The average price of Holding remains the same as @Srinivas has explained.
No, if you sold and bought back at a higher price on the same day, then it leads to an intraday loss. The average price of Holding remains the same.
My bad. Thanks for the clarification.
Well , selling for example Reliance shares in my holding which are there in my demat account since 10 months, and selling them to get extra cash??
1st - If I sell my holdings today, will the margin limit get automatically increased because those shares would be settled on T + 2 basis.
2nd - If I sell those Reliance shares in the morning for extra margin & buy back those shares before market closes, how can I escape capital gain taxes because my holding period will now be refreshed to current date, the day I bought them. Now I will be holding Reliance shares from new date basis. Earlier my date of holding was 10 months back.
3rd - Pledging the shares doesn’t work in a better way rather than selling the old holdings & buying them back later?
The cash will be credited instantly in your trading account when you sell shares from holdings. You can use this cash to buy other holdings or for intraday/positional trading. But you can withdraw it only after T+2 days, because that is when the cash is settled in your account by the buyer of your stocks,
If you sell shares from holding but buy it back on the same day, then this will be considered as an intraday trade. You holding buy date will remain the same as before(10 months back) and will not shift to the current date. But yeah you can sell shares, use the margin for trading and buy back the holdings before market closes. This is a valid strategy to get extra margin.
Pledging is a better option to receive a collateral margin for trading. But there will be a haircut applied on the margin you receive and also, the pledging/unpledging process takes one day. So if you want to sell your pledged stocks instantly, it’s not possible. You have to unpledge before 2pm and then you can sell the stocks only next day. But if you don’t require to immediately sell the stock, then pledging is certainly what you should do. This is the list of stocks you can pledge.
Thanks, I was not aware of this feature.
When you say that the ‘average price’ of the holding remains the same, do you mean the initial buy price?
Yes, that’s correct.
Hi ! if is sell a stock held for over one year on a day and buy it back before end of day, will the stock still be considered long term holding?