Intuition The one-line mental modelWhen you buy a stock you make two choices at once : how long you want to hold it (a product type ) and when you want to trade (during market hours). CNC ("Cash aNd Carry") says "keep the shares — deliver them to my account." MIS ("Margin Intraday Square-off") says "I'm just renting a position for today; close it before the market shuts."
The whole difference boils down to: Do you take delivery of the shares, or must you exit the same day?
A product type is a tag you attach to an order that tells your broker how the position should be treated — whether it will be held overnight (delivery) or forced to close today (intraday), and how much margin (borrowed buying power) you get.
Definition CNC — Cash aNd Carry (Delivery)
You pay the full price of the shares.
Shares are credited to your Demat account (settled via T+1 in India).
You can hold them for days, months, or years .
No auto square-off.
Definition MIS — Margin Intraday Square-off (Intraday)
You pay only a fraction of the value (broker gives you leverage ).
The position must be closed before market close (broker auto-squares off ~3:20 PM in India).
Shares never enter your Demat ; it's a same-day round trip.
Intuition Why the market needs both
A long-term investor doesn't want to babysit a chart all day — they need to own the asset. That's delivery / CNC .
A short-term trader is betting on a small intraday move and wants to trade a bigger size with less cash . Brokers can safely lend leverage only if they know the position will be closed by day-end (so the loan lasts a few hours, not overnight). That's intraday / MIS .
Leverage is the price of the promise to exit today. No overnight risk for the broker → cheaper margin for you.
We don't memorize "5x margin." We build it.
Worked example Example 2 — MIS (intraday), same tradeSame buy, but product = MIS with margin m = 0.20 m=0.20 m = 0.20
Cash needed = m V = 0.20 × 5000 = ₹ 1000 = m V = 0.20\times5000 = ₹1000 = mV = 0.20 × 5000 = ₹1000
Why only ₹1000? Broker lends the rest for a few hours because you'll close today.Suppose it rises just r = 2 % r=2\% r = 2% = ( 510 − 500 ) × 10 = ₹ 100 =(510-500)\times10=₹100 = ( 510 − 500 ) × 10 = ₹100
Return on your money R = 100 / 1000 = 10 % R = 100/1000 = 10\% R = 100/1000 = 10%
Check with formula: R = r / m = 2 % / 0.20 = 10 % R = r/m = 2\%/0.20 = 10\% R = r / m = 2%/0.20 = 10% A 2% stock move became a 10% return.
Why this step? We divided by the margin (₹1000) not the value, because ₹1000 is what left your pocket.
Worked example Example 3 — The dark side of leverageSame MIS position, but the stock falls 2% (to ₹490).
P&L = ( 490 − 500 ) × 10 = − ₹ 100 =(490-500)\times10 = -₹100 = ( 490 − 500 ) × 10 = − ₹100 R = − 100 / 1000 = − 10 % R = -100/1000 = -10\% R = − 100/1000 = − 10%
A tiny 2% dip wiped out 10% of your capital. In CNC the same dip is only −2%.
If it fell 20% intraday, MIS return = − 20 % / 0.20 = − 100 % = -20\%/0.20 = -100\% = − 20%/0.20 = − 100% you lose your entire ₹1000 . This is why brokers auto-square-off before losses exceed your margin.
Common mistake "MIS gives me more shares, so it's just better."Why it feels right: With ₹1000 you can suddenly control ₹5000 of stock — feels like free money.
The fix: Leverage scales losses by the same L L L loan with your capital as collateral . Formula R = L ⋅ r R=L\cdot r R = L ⋅ r
Common mistake "I bought MIS, I'll just hold it for a week."Why it feels right: You bought a share, surely it's yours now.
The fix: MIS is never credited to Demat . If you don't exit, the broker auto-squares-off near close (often at a bad price + charges). To hold, you must convert MIS → CNC before square-off and pay the full margin.
Common mistake "CNC lets me short-sell overnight."Why it feels right: CNC seems like the "full-power" mode.
The fix: You cannot carry a short in CNC — you can't deliver shares you don't own. Short-selling is only allowed intraday (MIS) and must be bought back the same day. CNC short = you'd need shares to deliver; you have none.
Common mistake "Auto square-off happens exactly at 3:30 PM."Why it feels right: Market closes at 3:30.
The fix: Brokers square off earlier (~3:20 PM) to be safe. Cutting it fine risks the broker's algo, not the exchange bell.
Recall Feynman: explain to a 12-year-oldImagine a toy store. CNC = you buy the toy and take it home — it's fully yours, keep it forever. MIS = you rent a toy for the afternoon ; the shop lets you rent an expensive toy for a small deposit, but you must return it before closing time , or the shopkeeper grabs it back himself. Renting lets you play with a costlier toy cheaply — but if the toy breaks (price drops), you still owe for the damage, and the small deposit disappears fast!
Mnemonic Remember the letters
C NC → C arry & C ollect (C ash paid, shares C ome to Demat).M IS → M ust I S ell (or square-off) today. M also = M argin = leverage.
Feature
CNC (Delivery)
MIS (Intraday)
Cash required
Full value (m = 1 m=1 m = 1
Fraction (m < 1 m<1 m < 1
Leverage L = 1 / m L=1/m L = 1/ m
1 × 1\times 1 × > 1 × >1\times > 1 ×
Holding period
Days–years
Same day only
Auto square-off
❌
✔ (~3:20 PM)
Enters Demat
✔
❌
Short-selling
❌ (need shares)
✔ (must cover same day)
Risk
Stock move
Move × L \times L × L
What does CNC stand for and mean? Cash aNd Carry — delivery; pay full price, shares go to Demat, hold as long as you want, no auto square-off.
What does MIS stand for and mean? Margin Intraday Square-off — leveraged intraday; pay a fraction, must exit before ~3:20 PM or broker auto-closes.
Formula for leverage in terms of margin fraction m m m Formula for return on your own capital under leverage? R = L ⋅ r = r / m R = L\cdot r = r/m R = L ⋅ r = r / m , where
r r r is the stock's % move.
If margin fraction is 20% and stock rises 3%, what's your return? 3 % / 0.20 = 15 % 3\%/0.20 = 15\% 3%/0.20 = 15% .
Can you hold an MIS position overnight? No — you must convert it to CNC (paying full margin) before square-off, else it's auto-closed.
Can you short-sell in CNC (delivery)? No — you'd need to deliver shares you don't own. Short only via MIS, covered same day.
Why do brokers give more leverage for intraday than delivery? The loan lasts only hours and is force-closed today, so the broker carries no overnight risk.
On what value is your P&L computed — margin or full position? On the full position value: P&L
= Δ P × Q =\Delta P \times Q = Δ P × Q , regardless of how much margin you posted.
In CNC, what is m m m L L L m = 1 m=1 m = 1 (full pay), so
L = 1 L=1 L = 1 ; your return equals the stock's return.
MIS Margin Intraday Squareoff
Leverage L equals 1 over m
No overnight risk for broker
Return R equals L times r
Intuition Hinglish mein samjhoDekho, jab tum koi share kharidte ho to do decision ek saath lete ho: kitne time hold karna hai, aur kitna paisa lagana hai. CNC matlab "Cash aNd Carry" — poora paisa do, share tumhare Demat account me aa jaayega, aur jitna chaaho utne din rakho. Ye long-term investor ke liye hai. MIS matlab "Margin Intraday Square-off" — broker tumhe leverage deta hai, thoda sa paisa (jaise 20%) lagao aur bada position control karo, lekin ek shart hai: same day, market band hone se pehle (~3:20 PM) position band karni padegi , warna broker khud band kar dega.
Leverage ka formula simple hai: agar margin fraction m m m L = 1 / m L = 1/m L = 1/ m R = r / m R = r/m R = r / m r r r loss bhi 5x hoga. 2% girne par 10% loss, aur 20% girne par tumhara poora capital saaf .
Sabse badi galti jo log karte hain: MIS me kharid ke sochte hain "hold kar lunga hafte bhar". Nahi ho sakta — MIS Demat me jaata hi nahi. Rakhna hai to pehle MIS ko CNC me convert karo aur poora paisa bharo. Aur ek baat — short selling sirf intraday (MIS) me hoti hai, CNC me nahi, kyunki deliver karne ke liye tumhare paas share hone chahiye.
Simple funda: CNC = toy ghar le aao (tumhara ho gaya). MIS = toy shaam tak ke liye kiraye pe (deposit thoda, par closing time pe wapas karna padega). Leverage sasta zaroor lagta hai, par risk management aur stop-loss ke bina MIS me mat ghuso.
