The average price of shares is always calculated using FIFO (first in, first out), even when the shares are pledged for a loan.
This is because pledged shares are not sold or moved out of your demat account. They are only lien-marked, so your holding remains unchanged.
What FIFO means
FIFO means that when you sell shares, the oldest shares you bought are considered first.
Example
You bought:
- 200 shares at Rs. 100 each
- 300 shares at Rs. 120 each
- 500 shares at Rs. 150 each
If you pledge and then sell 300 shares, FIFO applies:
- First 200 shares at Rs. 100
- Next 100 shares at Rs. 120
So the average price works out to Rs. 106.67 per share.
Pledging shares does not affect how your average price is calculated. FIFO continues to apply just as it would with normal selling.