CNC vs MIS Order
I personally believe that this confusion between CNC and MIS was created by Zerodha.
Zerdoha initially in its BUY Order had 2 options (radio buttons) to choose from CNC and MIS. For share market beginners it was confusing !
Zerodha added a clear note these days, Intraday MIS and Longterm CNC. They even added a tool-tip to highlight their full form, you can place your cursor on text to read that.
CNC or Cash and Carry
This is a long term kind of investment. You are buying the share of a company and you want them in your Demat account as you intend to hold them for sometime.
Since you want to buy and hold, the broker charges you for the amount, brokerage and tax. Higher Margin is required by the broker and you can transact only to the amount of money you are ordering. For example
If you want to buy 10 X company stock trading at INR 100 each, you will probably need 1005 Rs in your account to transact.
One interesting note from Zerodha page worth quoting is
CNC is just a product type. If you use CNC to buy and sell a share on the same day, it will still be considered as an intraday trade, and the brokerage will be levied as per intraday.
MIS or Margin Intraday Square Off
This is a short term investment, commonly known as trading (Stock Trading vs Stock Investing). Here the buyer / seller (short selling) do not want to hold the stock more then the trading day (called intraday).
Since you do not want delivery of stocks, most brokers charge less brokerage and some even allow you to transact a higher value (called MARGIN) than your account depending upon your stock portfolio holding value.
In simple terms, you may buy more with what money is in your account ! For example if you have INR 1005 in your account, and you want to trade on share X trading at INR 100 each, you can actually transact for more than 10 quantity if your broker allows, hence M (Margin).
Also since you intend to BUY / SELL same day, if you do not, your broker will automatically square off if you forget to close your transaction before the daily auto-square off time (For Zerodha it is 1520 or 0320 PM for equity stocks). Many brokers charge extra for auto-square off , anyways since transaction is intraday, thus IS (Intraday square off).
STOCK INVESTMENT VALUE INVESTING GROWTH INVESTING STOCK MARKET COURSE FINANCIAL PLANNING
