What is CNC and MIS in Zerodha?

What is CNC and MIS in Zerodha?

Zerodha is one of India’s major discount brokerage firms. While using the platform to buy or sell, you might have come across words like MIS and CNC. For first-time users, these words can be a little difficult to understand.

To start your journey, It is essential to learn about every little aspect of investing. While these may seem basic, a lack of knowledge might result in a huge opportunity loss.

In this article, you will learn what is CNC and MIS in Zerodha and other stock brokers in general. Let’s start! 

Quick Introduction

In a few short words, Zerodha has a few product codes that specify different actions they perform. So whenever you want to place an order through Zerodha Kite, you need to choose product codes like MIS and CNC. 

To start, there are two different order types for buying and selling stocks on the stock market. They are not just limited to stocks as they can be used for other financial instruments as well. For someone new to the world of trading, it can get a little confusing. 

Therefore, let us understand the difference between CNC and MIS in Zerodha in detail:

What is CNC?

CNC stands for Cash and Carry. It is basically a service code or a product code that is used for delivery-based trading in equity. If you want to buy or sell stocks and hold them in your demat account for the long term, you can place CNC orders.

Here are a few points that you need to take care of:

  • If you are choosing CNC while trading, it means that your transaction is entirely cash basis. This means that the payment is done the moment you purchase the stock.
  • You can not utilize leverage margin. The full amount of cash should be available in your account to purchase the stocks.
  • As the name suggests, you will carry the share until you want to place the sell order. Till then, this asset will remain in your demat account and will not be auto-squared.
  • CNC orders are typically used for investing and taking delivery of shares.
  • If a CNC in Zerodha is used to buy and sell a share within the same day, it will regarded as an intraday trade. Moreover, the platform offers brokerage-free delivery trading which means that all CNC orders are free of brokerage.

What is MIS?

MIS stands for Margin Intraday Square-off. It is mainly used in intraday trading. This can also be used for assets like stocks, futures, and commodities. Unlike CNC transactions, you get a margin in MIS which is basically a credit extended by the broker.

Here are a few points:

  • MIS orders get squared off automatically by the algorithm at the end of the day. However, in case, the investors manually do not let it happen within the specified time, Zerodha charges an additional Rs.50 per order which is executed for intra-day positions squared-off by the system.
  • You can take advantage of leverage when you place an MIS order to buy. It means that you buy the shares at a lesser price than the market.
  • They are especially useful for short-term trading and speculation.

Another product code available is known as NRML in Zerodha. It is used for trading of futures and options overnight. This allows the traders to carry their positions until expiry in the market.

Zerodha allows its users to convert MIS positions to NRML on the condition that they have enough margins and holdings in their accounts.

How to use CNC and MIS in Zerodha?

Place/Buy a CNC order in Zerodha

Follow the steps below to place a CNC order in Zerodha:

  • Open the Zerodha Kite app and log in with your credentials.
  • Scroll through the watchlist and select the stock you want to buy.
  • Click on the “buy” option to proceed.
  • Select the product type as “CNC” and enter the price and quantity required. The software will automatically carry forward the shares at the end of the trading day.
  • Finally, swipe to place your order and buy the shares.

How to Sell CNC Orders in Zerodha?

To sell any share in CNC, the particular stock should be in your demat order first. You can not short-sell unless the shaws are actually in your demat account. Below are the steps to sell a CNC order in Zerodha:

  1. Log in to the Zerodha kite app using your User ID and password.
  2. Click on the hamburger menu which is located in the top right corner and click on the “Sell” option.
  3. A new window will open up. Enter the number of shares you want to sell in the “OTY” section and select the order type as CNC.
  4. Enter the desired CNC limit price. Fill in all the relevant details and click on “Sell”.
  5.  After this, you will be redirected to CDSL. fill in the T-Pin provided to you at the time of registration.
  6. Once you enter the T-Pin, you will be authorized to sell your shares.

Place/Buy an MIS order in Zerodha

Below are the steps:

  1. Open the Zerodha kite app on your device and log in with your user ID and password.
  2. Scroll through the watchlist and select the stock you want to buy.
  3. Click on the “buy” option to proceed.
  4. Select the product type as “MIS” and enter the price and quantity required. Make sure to square off the intraday position by 3:20 p.m.
  5. Finally, swipe to place your order and buy the shares.

How to Sell MIS Orders in Zerodha?

The procedure is the same as selling a CNC order. However, you can put a sell MIS order in Zerodha using any order type like a limit order, market order, or stop-loss order. You can also place a cover order for a sell MIS order.

Make sure to select the product type as MIS while placing the order. This is essential as the trade parameters will depend on the order type you choose.

Key Features & Benefits of CNC and MIS

CNC (Cash and Carry)

  • With CNC, you can buy stocks and hold them for more than one day.
  • There is no leverage provided because CNC is used for delivery-based trades.
  • There are no interest charges involved.
  • These stocks are ideal for those investors who want to invest for the long term.
  • You gain full ownership of the stocks. This means you get voting rights, dividends, and more.
  • There is no risk involved caused due to market volatility.
  • It is a cost-effective method for long-term investing.
  • You can sell the stocks whenever you want.

MIS (Margin Intraday Square-off)

  • Unlike CNC, MIS provides leverage, allowing you to take larger positions with smaller capital.
  • If traders fail to square off their MIS positions before the designated time, positions are automatically squared off.
  • When compared to CNC, there are lower margin requirements.
  • You can trade in many assets such as equities, futures, options, and commodities using MIS.
  • One can expect higher returns on their trades with leverage.
  • MIS has lower margin requirements.
  • It is suitable for day traders and can be used to make huge profits.
  • The Auto square-off feature helps in managing risk as well.

Final Thoughts

I hope this article provides some clarity to your question of what is CNC and MIS in Zerodha. CNC is perfect for those who are looking to invest in the long term. While MIS is great for day traders, offering leverage and an automatic square-off feature.

The choice between the two completely depends on individual preferences and investment goals. In case you still have some questions, please ask them in the comment section and make an informed decision!

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