Work out the weighted average price of a share across every purchase, with brokerage included, plus your break-even price, dividends and total return.
Why is my average not the middle of the prices I paid?
Because it is weighted by how many shares you bought at each price. A hundred shares at ₹250 count four times as much as twenty-five at ₹205. A plain average of the prices ignores that and can be out by a wide margin, which matters when you are deciding whether you are up or down.
Should brokerage be part of the average?
For deciding whether you have made money, yes. Brokerage, STT, stamp duty and the exchange fees are money you spent to own the shares, so they raise the price at which you break even. For the tax computation the treatment differs by charge, and STT specifically is not allowed as a cost of acquisition.
How do dividends change the picture?
They are cash that has already left the position and reached you, so they lower the price you need to recover what you put in. ₹1,800 of dividends on 225 shares takes ₹8 off your break-even. They are taxed at your slab rate in the year you receive them.
What about bonus shares and splits?
Enter a bonus issue as a lot at a price of zero, and the average falls exactly as it should. A split is different: adjust every earlier lot, so 100 shares at ₹250 in a one-to-five split become 500 shares at ₹50. The value did not change, only the number of pieces.
Is this my cost for capital gains tax?
No, and this trips people up. Indian capital gains match a sale against the actual lots you bought, oldest first. Sell 60 shares and the tax looks at the 60 oldest, not at 60 shares priced at your average. The two agree only when every lot cost the same. Use the capital gains calculator for the tax.
Does averaging down actually work?
It lowers the average, which is arithmetic and always true. Whether it works depends entirely on whether the business recovers. Buying more of something only because it is cheaper than you paid is anchoring to your own past price, which the market has no interest in.