In the world of stock trading and derivatives, especially in the Indian market, brokers like Zerodha, Upstox, and Angel One offer two common order types: MIS and CNC. Traders and investors often feel confused about which one to choose. If you understand the key difference between MIS (Margin Intraday Square-off) and CNC (Cash and Carry), you will trade with more confidence and less risk.
This article explains both concepts in simple terms, compares them directly, and helps you choose the right one based on your trading style.
Understanding MIS (Margin Intraday Square-off)
Brokers created MIS to support intraday trading. When you select the MIS option, you commit to buying and selling stocks within the same trading day. You cannot carry the position overnight.
Key Features of MIS:
- Intraday Only:
You must square off (close) the position before the market closes. If you forget, the broker will do it automatically around 3:15 PM (for equity). - Margin Benefit:
Brokers offer leverage under MIS. That means you can buy stocks worth more than your account balance. For example, with 5x leverage, ₹10,000 in your account can control ₹50,000 worth of stock. - Auto Square-Off:
If you don’t exit your position manually, the broker will force-close it near market close. - Lower Holding Risk:
Since you don’t carry positions overnight, you avoid risks from after-market news or global events. - Trading Only (Not Delivery):
You don’t get delivery of stocks under MIS. The system treats it as a pure trade, not an investment.
Example:
You buy 100 shares of Stock A using MIS at ₹100. You sell it the same day at ₹105. You earn a profit of ₹500 (excluding charges). But if you forget to sell, the broker sells it automatically—even if the stock is down.
Understanding CNC (Cash and Carry)
CNC stands for Cash and Carry, and brokers designed it for delivery-based investing. You use CNC when you want to buy and hold stocks for more than one day.
Key Features of CNC:
- No Intraday Restriction:
You can hold stocks for days, weeks, months, or even years. There’s no time limit. - No Leverage:
You must use 100% of your funds to buy stocks. Brokers don’t offer extra buying power under CNC. - Ownership of Shares:
The stocks you buy move to your Demat account after settlement (T+1 in India). You become the legal owner. - No Auto Square-Off:
You control the sell decision. The broker never closes your position unless you place a sell order. - Used for Investing:
Investors use CNC for long-term wealth creation, not for short-term trades.
Example:
You buy 100 shares of Stock B using CNC at ₹200. You hold them for 6 months and sell when the price reaches ₹280. You earn ₹8,000 profit (excluding charges), and the shares stay in your Demat account throughout.
Major Differences Between MIS and CNC
Let’s break the key differences into a simple comparison:
| Feature | MIS (Margin Intraday Square-off) | CNC (Cash and Carry) |
| Purpose | Intraday trading | Delivery-based investing |
| Holding Period | Same-day only | Unlimited (you decide) |
| Leverage Available | Yes (depends on broker & stock) | No (you pay full price) |
| Stock Delivery | No | Yes (goes to Demat account) |
| Square-Off Time | Auto square-off by broker (3:15 PM) | No forced square-off |
| Risk Exposure | Market volatility during the day | Overnight and long-term risks |
| Capital Requirement | Lower due to margin | Higher, as full payment required |
| Used By | Day traders | Long-term investors |
When Should You Use MIS?
You should use MIS when:
- You plan to enter and exit the position on the same day.
- You understand market trends and can make fast decisions.
- You want to benefit from leverage to trade more with less capital.
- You stay available during market hours to manage your trades.
- You accept higher short-term risks and focus on small gains with tight stop-losses.
Intraday traders thrive on volatility. They use technical analysis, news, and momentum to profit from short-term price movements. If that matches your style, MIS will suit you perfectly.
When Should You Use CNC?
You should use CNC when:
- You want to invest in a stock and hold it long-term.
- You believe in a company’s growth story and prefer fundamental analysis.
- You don’t want margin risks or forceful square-offs.
- You focus on wealth creation, dividends, or compounding returns.
- You prefer a low-stress investing style.
Investors who use CNC don’t worry about daily price swings. They look at quarterly results, business models, and market potential. CNC gives them full ownership and peace of mind.
Can You Convert MIS to CNC?
Yes, you can convert an open MIS position into CNC before the square-off time—if you have enough funds in your account. Brokers allow this flexibility.
Example:
You buy 50 shares of Stock C using MIS at ₹150. By noon, you decide to hold it long-term. You open your order history, click on the open position, and choose “Convert to CNC.”
If your account has enough cash to pay for the full position, the system approves it. The position then changes to CNC, and you now hold the shares in your Demat.
Key Mistakes to Avoid
1. Using MIS and Forgetting to Sell
Many beginners buy using MIS but forget to square off. Brokers then auto-sell the position, sometimes at a loss. Always track your trades when using MIS.
2. Using CNC for Intraday Trades
If you buy using CNC and try to sell the same day, the broker may not allow it or may block the trade, depending on their risk policies. Always match your intent to the right order type.
3. Confusing Margin with Profit
Just because you get 5x leverage doesn’t mean you earn 5x profit. If the stock moves against you, your losses multiply. Always use stop-losses in MIS trades.
MIS and CNC serve different purposes in the stock market. MIS empowers traders who thrive on daily price movements and want to use margin for short-term trades. CNC supports investors who prefer long-term stock ownership and avoid margin-related stress.
You don’t need to choose one forever. You can trade with MIS during the day and invest with CNC for the long haul. But always remember—clarity in strategy brings discipline in trading.
So the next time you open your trading app and see those two buttons—MIS and CNC—ask yourself: Am I trading, or am I investing?
FAQs: MIS vs CNC
1. Can I convert an MIS order to CNC anytime during the trading day?
Yes, you can convert an MIS order to CNC as long as the market is open and you have sufficient funds in your account to cover the full value of the trade. Always complete the conversion before the broker’s square-off timing (usually around 3:15 PM for equity).
2. Will I receive shares in my Demat account if I buy using MIS?
No, you will not receive shares in your Demat account when you use MIS. Since MIS is only for intraday trading, the system requires you to close the position on the same day. The broker treats it as a trade, not a delivery.
3. Can I sell CNC shares on the same day after buying?
Yes, you can sell CNC shares on the same day in many cases. However, this depends on your broker’s policy and whether the shares are available for intraday square-off. If the broker restricts it, consider using MIS for intraday trades.
4. Does CNC require a Demat account?
Yes, CNC requires a Demat account because you take actual delivery of shares. After the trade settles (usually T+1), the shares get credited to your Demat account.
5. Which is riskier—MIS or CNC?
MIS carries higher short-term risk because of leverage and the pressure to close positions within the same day. CNC, on the other hand, avoids leverage and allows you to hold shares long-term, making it less risky for investors who think long term.
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