100 shares at ₹500, then 50 at ₹400
Rohan bought 100 shares of a company at ₹500 each. Months later the price was ₹400, and he bought 50 more. His broker app shows an average price of ₹466.67. Where does that come from, and why isn’t it ₹450?
His first buy cost ₹50,000 and the second ₹20,000. That is ₹70,000 for 150 shares, or ₹466.67 a share. The simple average of the two prices is ₹450, but he bought twice as many shares at ₹500, so that price weighs more.
At ₹400, his 150 shares are worth ₹60,000. He is ₹10,000 down, and the price has to climb back to ₹466.67 just for him to break even.
The formula
Average price is the total money paid divided by the total shares:
Average = (q1 × p1 + q2 × p2 + q3 × p3) ÷ (q1 + q2 + q3)
q is the shares in each buy and p the price per share. Bought more than three times? Enter the shares you hold now and your broker’s average as the first buy, then add the new ones.
Averaging down, and what it costs
Buying more below your average brings the average down. Here is Rohan’s average if he buys more at ₹400:
| Extra shares at ₹400 | New average | Total invested |
|---|---|---|
| 0 | ₹466.67 | ₹70,000 |
| 75 | ₹444.44 | ₹1,00,000 |
| 150 | ₹433.33 | ₹1,30,000 |
| 450 | ₹416.67 | ₹2,50,000 |
With 150 more shares, the price needs to rise only 8.33% from ₹400 to reach his average, against 16.67% before.
The catch: his money in this one company goes from ₹70,000 to ₹1,30,000. Every ₹1 fall now costs him ₹300 instead of ₹150. A lower price can be a bargain or a sign of trouble in the business, and the average can’t tell you which. Prices can keep falling with no guarantee they come back, so many investors fix a limit for any one company in advance. This page does the maths, the decision stays yours.
Bonus shares and splits
Bonus shares are free, so your cost stays the same while the share count rises and the average falls. With 100 shares bought at ₹500 and a 1:1 bonus, enter the 100 bonus shares as a buy at ₹0. The average comes to ₹250.
In a split where one share becomes five, multiply your shares by 5 and divide the price by 5. 100 shares at ₹500 become 500 at ₹100, still ₹50,000 in all. Neither makes you richer, because the market price adjusts in the same ratio.
Why your broker’s average can differ
This calculator uses only the share price, without brokerage, STT, stamp duty, exchange charges or GST. Some brokers add these into the average, so their number can be a few paise higher.
For tax, the average isn’t what counts. Shares in a demat account are treated as sold in the order you bought them, first in, first out. Each buy keeps its own price and its own 12-month clock. Sell within 12 months and the gain is taxed at 20% plus 4% cess. After 12 months it is 12.5% plus cess on gains above ₹1.25 lakh a year.
Buying in small parts on fixed dates is the idea behind a SIP. For IPO shares, the IPO listing gain calculator shows the listing-day profit or loss.
Frequently asked questions
How do I calculate the average price of shares?
Multiply the shares in each buy by its price, add these up, and divide by the total number of shares. 100 shares at ₹500 and 50 at ₹400 cost ₹70,000 for 150 shares, so the average is ₹466.67. It is not the simple average of the two prices, which would be ₹450.
What does averaging down mean in shares?
It means buying more shares of a company you already hold, at a price below your average, so the average comes down. If you add 150 shares at ₹400 to 150 shares averaging ₹466.67, the new average is ₹433.33. But your money in that one company goes from ₹70,000 to ₹1,30,000, so any further fall hurts twice as much.
How do bonus shares change my average price?
Your total cost stays the same, but you have more shares, so the average falls. With a 1:1 bonus, 100 shares bought at ₹500 become 200 shares with an average of ₹250. In this calculator, enter the bonus shares as a buy at ₹0.
Why is my broker's average price different from this calculator?
This calculator uses only the share price and leaves out brokerage, STT, stamp duty, exchange charges and GST. Some brokers add these charges into the average, so their figure can be a few paise higher. A split or bonus entered differently can also make the two numbers differ.
Is capital gains tax worked out on the average price?
No. Shares in a demat account are treated as sold in the order you bought them (first in, first out), so each buy has its own price and its own 12-month clock. A gain on shares sold within 12 months is taxed at 20% plus 4% cess. After 12 months it is 12.5% plus cess on gains above ₹1.25 lakh a year.
Calculator maintained by Manoj. Last reviewed: 21-10-2026. Rates and rules are checked against official sources. Tell us if something has changed. Contact
