CNC vs. MIS: What's the Difference?

A trader needs to place orders on a broker's terminal while trading. Placing orders is a crucial step while dealing in the trade market. Knowing the distinction between the two kinds of orders—CNC and MIS—is important for every trader. These CNC and MIS orders specify whether you're taking a position or just doing intraday trading. Today we shall understand these orders and their significance in depth.

What are the CNC orders?

"CNC" stands for cash and carry. They are a specific kind of order that is highly popular among investors in the trading market. A CNC order is a share trading order, i.e., it will be credited to the Demat account two days after purchase.

On the other hand, upon selling the stock, the shares are debited from your Demat account. If you desire to maintain a specific share for a certain time period, you must place a CNC order.

The properties of CNC orders

The following are the properties of CNC order:

Funds required

When putting a market order for CNC, you must subsidise all your funds. You do not get any leverage while placing a CNC order. For instance, if you place a Rs 5000 CNC order, you can buy an equal amount of shares having the same worth.

No auto-square-off 

You need to remember that when you buy a share via CNC and pay the amount upfront, the share price is not entitled to change. For instance, you buy the share of Tata at a particular price and the CNC is executed. In that case, you're entitled to the same price for Tata shares.

No short selling

CNC means Cash and Carry utilised for equity-based trading. Thus, you cannot hold a stock temporarily, via CNC trading types, unless you retain the shares in your Demat account.

What is MIS in the Share Market?

MIS stands for Margin Intraday Square-off. It is typically famous among intraday merchants. For instance, if you purchase 50 stakes of Bajaj in the morning, you must surrender your position before the end of the day. The broker shall notify you of the ideal time to sell your shares. If you are unable to sell, the broker shall sell them before the day ends.

Properties of MIS orders

The following are the properties of MIS order:

Leverage

Since MIS market orders are solely meant for intraday trading, the brokers loan you their money. The leverage on the money being loaned out changes from broker to broker.

Short selling is permitted

Unlike CNC stock trading, MIS orders are meant for short-term selling, and you must sacrifice your position before the day ends.

Auto square-off

If you don't sell your shares before the end of the day, the broker voluntarily sells them off before the day ends.

Conclusion: Cnc And Mis

So we see, that CNC orders are generally a good fit for those who have enough funds and wish to trade overnight. Whereas, in MIS market order you obtain leverage from the broker for intraday trading. For instance, the Dhan app can help you decide which one is better for you, and you can start trading soon.

Disclaimer: This article is not a piece of investment advice. Trading and investing in the securities market carries risk. Please do your own due diligence or consult a trained financial professional before investing.