Selling of shares

• Speculative transactions (intraday equity trading)

For all speculative transactions, aggregate or absolute sum of both positive and negative differences from trades is to be considered as a turnover. So if you buy 100 shares of Reliance at 800 in the morning and sell at 820 by afternoon, you make a profit or positive difference of Rs 2000, this Rs.2000 can be considered as turnover for this trade.

• Non-speculative transactions (Futures and options)

For all non-speculative transactions, the turnover to be determined as follows –

• The total of favourable and unfavourable differences shall be taken as turnover
• Premium received on sale of options is also to be included in turnover
• In respect of any reverse trades entered, the difference thereon should also form part of the turnover.

So if you buy 25 units or 1 lot of Nifty futures at 8000 and sell at 7900, Rs.2500 (25 x 100) the negative difference or loss on the trade is turnover.

In options, if you buy 100 or 4 lots of Nifty 8200 calls at Rs.20 and sell at Rs.30. Firstly, the favourable difference or profit of Rs 1000 (10 x 100) is the turnover. But premium received on sale also has to be considered turnover, which is Rs 30 x 100 = Rs 3000. So total turnover on this option trade = 1000 +3000 = Rs 4000.

The above calculations (points 1 to 3) are fairly straight forward; the next important thing to decide though is if you want to calculate turnover scrip wise or trade wise.

Scrip wise is when you calculate the turnover by collating all trades on the particular contract/scrip for the financial year, find average buy/sell value, and then determine the turnover using the above 3 rules with the total profit/loss or favourable/unfavourable difference on this average price.

Trade wise is when you calculate the turnover by summing up the absolute value of profit and loss of every trade done during the year and following the above rules.

Let me explain both with some examples –

1. 100 Nifty Jan future bought at 8000 and sold at 8100 on 1^st Another 100 Nifty Jan future bought at 8100 and sold at 8050 on 10^th Jan. Determine turnover

Using scrip wise:

Average Nifty Jan Fut buy: 200 Nifty Buy at 8050

Average Nifty Jan Fut sell: 200 Nifty Sell at 8075

Total profit/loss = 200 x Rs 25 = Profit of Rs 5000 = Turnover of Nifty Jan Futures

Using trade wise:

100 Nifty Buy at 8000, Sell at 8100, Profit = Rs 10,000

100 Nifty Buy at 8100, Sell at 8050, Loss = Rs 5000

Turnover of Nifty Jan futures = Rs 10,000 + Rs 5000 (absolute sum of the loss) = Rs 15000

2. 100 Nifty Dec 8000 puts bought at 100 and sold at 50 on Dec 3^rd. Another 100 Nifty Dec 8000 puts bought at 50 and sold at 30. Determine turnover

Using scrip wise:

Average of Nifty Dec 8000 puts buy: 200 puts at 75

Average of Nifty Dec 8000 puts sell: 200 puts at 40

Total profit/loss = 200 x Rs 35 = Loss of Rs 7000

Total Selling value of options = 200 x Rs 40 = Rs 8000

Total Turnover for Dec 8000 puts = Rs 7000 + Rs 8000 = Rs 15000

Using trade wise:

Trade 1

100 Nifty Dec puts bought at 100 and sold at 50, Loss = Rs 5000

Selling value of options =100 x Rs 50 = Rs 5000

Turnover = Rs 10000

Trade 2

100 Nifty Dec puts bought at 50 and sold at 30, Loss = Rs 2000

Selling value of options = 100 x Rs 30 = Rs 3000

Turnover = Rs 5000

Total turnover = turnover of (trade 1+trade2) = Rs 15000

Courtesy: Zarodha