CNC, MIS, & NRML in the share market are the most common order types traders encounter while placing stock market orders. Although these terms appear simple on trading platforms, each serves a different purpose depending on whether the trade is delivery-based, intraday, or linked to futures and options.
They directly affect leverage, holding period, margin requirements, and auto-square-off rules, and understanding the differences can help investors and traders place orders more appropriately according to their trading approach.
What is CNC in the Share Market?
In the share market, Cash and Carry (CNC) is a product code used for delivery-based equity investing. When you select CNC, you purchase shares and hold them in your Demat account for the long-term, instead of trading on same-day price movements.
CNC Explained: Delivery-Based Investing Made Simple
CNC is commonly used by investors who want actual ownership of shares instead of short-term speculative trading. Let us see how it works:
- 100% upfront payment: You must pay the full value of the shares while placing a CNC order because this trading option generally does not include leverage.
- No holding restriction: CNC shares can stay in your Demat account for any duration, whether a few days or several years.
- Ownership benefits: After settlement, usually on a T+1 basis, you become eligible for shareholder benefits, such as dividends, bonus shares, and voting rights.
What is MIS in the Share Market?
MIS is an intraday order type that helps traders take short-term positions using broker-supported margin. The MIS orders are meant only for same-day trading and are automatically squared off before the market closes if the trader does not exit the position manually.
MIS Explained: Intraday Trading & Leverage
The main features of MIS trading are leverage or margin. Using margin, traders can participate in bigger market positions with comparatively lower capital. This helps traders to participate in the short-term market movements with comparatively lower capital.
For example, if a broker offers 5 times leverage and a trader has ₹10,000 in their account, they may be able to trade shares worth up to ₹50,000 using MIS. While this can increase potential profits, it can also increase losses at the same rate if the market moves in the opposite direction.
Here are some more features of MIS:
- Auto-square-off: The open MIS positions are closed automatically by the broker before market closing hours, if the trader does not exit manually.
- No overnight holding: MIS positions are usually not carried forward to the next trading day, hence auto-square-off. This helps traders to avoid overnight market volatility and unexpected news impact.
- Conversion option: Some brokers allow traders to convert MIS positions into delivery-based orders, such as CNC or NRML, before the market closes, if sufficient funds are available in the account.
What is NRML in the Share Market?
Normal Margin Order (NRML) is a trading product type mainly used in Futures and Options (F&O) trading in the share market, to carry positions beyond a single trading session. Unlike intraday orders, NRML allows traders to hold derivative contracts overnight until they decide to exit the position or until the contract expires.
NRML Explained: Carry Forward for F&O Traders
Since these trades are carried forward overnight, traders must maintain the required exchange-prescribed margin in their trading account.
How NRML works for F&O traders:
- Overnight Holding: Unlike MIS orders, which are usually squared off before market closing hours, NRML positions can be carried forward for days, weeks, or until the expiry of the contract.
- Margin Requirement: Traders must maintain the required SPAN and Exposure margin to hold NRML positions overnight.
- No Extra Intraday Leverage: Brokers generally do not provide additional intraday leverage for NRML orders, so traders need to maintain the standard margin required for the trade.
CNC vs MIS vs NRML: Key Differences Every Trader Must Know
Let us understand the key differences between CNC, MIS, and NRML based on the following factors:
| Criteria | CNC (Cash and Carry) | MIS (Margin Intraday Square-off) | NRML (Normal Margin) |
| Purpose | CNC is used for delivery-based equity investing where traders intend to hold shares in their Demat account. | MIS is mainly used for trades that are both opened and closed during the same market day. | NRML is used in Futures and Options trading for carrying positions beyond one trading day. |
| Holding Period | CNC shares can be retained in the Demat account without any fixed selling deadline. | MIS trades are generally completed during the same day before market closing hours. | NRML positions can be carried forward until the trader exits the position or the contract expires. |
| Leverage | CNC does not provide leverage, so investors must pay the full transaction value upfront. | With MIS, brokers may provide additional trading margin for short-term intraday positions. | NRML requires traders to maintain the standard exchange-prescribed margin without leverage. |
| Auto-Square-off | CNC orders are not typically subject to compulsory same-day square-off. | If traders do not close MIS positions themselves, brokers usually square them off before market closing hours. | Unlike MIS trades, NRML positions are usually allowed to continue overnight. |
| Suitable For | CNC is suitable for long-term investors and delivery-based traders. | MIS is mainly designed for traders aiming to profit from intraday market volatility. | NRML is suitable for derivatives traders planning overnight or positional F&O trades. |
Real-Life Use Cases: When Should You Use Each?
| Product Type | Use Case |
| CNC | This product type is mainly used for delivery-based investing and short-term positional holding. Let us say, you buy shares of a company and hold them for several years or for a few days without automatic intraday square-off. |
| MIS | This trading product is commonly used for short-duration trades executed within market hours. For example, you buy or short a stock during market hours and close the position before the market closes to capture short-term price movement. |
| NRML | Traders might use NRML to carry F&O positions overnight or use options contracts to hedge an existing investment portfolio. |
Final Thoughts
CNC, MIS, and NRML are all designed for completely different trading purposes in the share market. CNC is generally preferred for delivery-based investing, MIS is used for intraday trading with margin, and NRML is mainly suitable for carrying Futures and Options positions overnight.
Understanding how these order types work can help traders manage risk, margin, and holding periods more effectively while placing market orders.
FAQs
If you do not close an MIS position before market closing hours, the broker generally auto-squares off the trade. This is done because MIS orders are meant only for intraday trading and are usually not carried forward overnight.
Yes, some brokers allow traders to convert MIS orders into CNC or NRML positions before market closing hours. However, you must maintain the required funds or margin in your trading account for the conversion.
NRML is mainly used for Futures and Options trading because it allows traders to carry positions overnight until expiry or manual exit. However, availability may vary depending on the broker and trading segment.
No, leverage in MIS orders depends on the broker’s margin policy and market regulations. The different brokers may provide different leverage limits based on the stock, volatility, and trading segment.
Yes, CNC can technically be used for intraday trading, but it is primarily designed for delivery-based investing. Unlike MIS, CNC does not usually provide leverage or automatic intraday square-off features.
