CNC vs MIS in Zerodha Kite: A Beginner's Guide

Open the Kite app, tap any stock, hit Buy — and the very first thing you have to choose is "Product: CNC or MIS?". For someone who just opened a demat account last week, that little toggle is the most confusing screen on the entire platform. Pick the wrong one and you can end up with a forced square-off, a ₹59 penalty, or — worse — the shares sitting in your account when you thought you were just day-trading.

This is the single most-asked question in my batches. So here's the full breakdown — what each one means, how they actually work, where beginners get tripped up, and a simple decision rule you can use from your very next trade.

What Is a "Product Type", Anyway?

Every order you place on Kite has three layers attached to it — the stock, the order type (Market, Limit, SL, SL-M), and the product type. Most beginners spend all their time learning the first two and never stop to think about the third.

The product type is how you tell the broker why you're placing this trade. Is this a long-term holding? An intraday punt? A futures position you'll carry till expiry? Each of those answers triggers a completely different set of rules — how much capital is blocked, whether you get leverage, whether your position survives the closing bell.

Zerodha gives you three product types in total: CNC for equity delivery, MIS for intraday across segments, and NRML for overnight F&O positions. This article focuses on the first two, because that's where 90% of the confusion lives.

CNC: Cash and Carry, Decoded

CNC stands for Cash and Carry. The name is literal — you pay cash in full for the stock, and you carry it in your demat account for as long as you want. One day, one year, ten years — it's yours.

When you place a CNC buy order for 50 shares of Reliance at ₹1,400, Zerodha blocks the full ₹70,000 from your trading account. The shares get credited to your demat in T+1 days. From that moment on, the broker has no further claim on the position. You can sell it tomorrow morning, next month, or never.

Three things define CNC, and beginners need to internalise all three:

No leverage. Want ₹70,000 of Reliance? Bring ₹70,000. The broker is not lending you anything. You're a buyer, not a borrower.

No auto square-off. The market can close, reopen, close again — CNC positions don't care. They live in your demat indefinitely.

No short selling. You cannot sell a stock on CNC unless you already own it. If you try to short Reliance on CNC without holdings, Kite simply rejects the order. (This is one of the most common "why isn't my order going through?" questions.)

Per Zerodha's own documentation, there's a sneaky caveat too: if you buy a stock on CNC at 10 AM and sell it at 2 PM the same day, the system retroactively treats it as an intraday trade — and you'll be charged intraday brokerage even though you used CNC. The label doesn't override the behaviour.

MIS: Margin Intraday Square-Off, Decoded

MIS stands for Margin Intraday Square-Off. The name is doing two jobs at once — it tells you Zerodha will give you margin (extra buying power) and that the system will square off your position at end of day, no matter what.

When you place an MIS buy order for the same 50 shares of Reliance at ₹1,400, Zerodha doesn't block the full ₹70,000. Depending on the stock and SEBI's margin rules, it might block anywhere from ₹14,000 to ₹35,000. The rest is essentially a one-day loan from the broker.

That sounds great until you see what comes attached:

The 3:25 PM cliff. Per Zerodha's official auto-square-off policy, every open MIS equity position is force-closed at 3:25 PM. For equity F&O it's 3:26 PM. For MCX it's 10 minutes before the commodity market shuts. You don't get to vote.

The ₹59 penalty. If Zerodha has to do the square-off for you, the cost is ₹50 + 18% GST per order — roughly ₹59. Hit that on 5 orders in a single day and you've just paid ₹295 for the privilege of forgetting.

No control over exit price. The auto square-off is a market order. Whatever price the market is offering at 3:25 PM is the price you get. In a sharp last-minute move, that can be brutal.

And to be clear about what MIS is good for — it lets you take a meaningfully larger position than your capital allows, for one trading day only. That's a powerful tool when used with discipline, and a fast way to blow up an account when used without.

The Mental Model: Buying a House vs. Test-Driving a Car

If the rules feel abstract, this analogy is the one I use in every batch. It locks the difference in for good.

The mechanics, the upside, the downside — everything follows from this one mental picture. Now let's nail the specifics with a side-by-side.

CNC vs MIS: Feature-by-Feature

Eight things matter. Here are all eight in one place.

The Same Trade, Two Product Types

Numbers make the abstract concrete. Move the sliders to your own trade — see exactly what each path costs you and what it could cost you if you forget.

The MIS path looks cheaper. It isn't — it's the same trade, just with leverage. If the stock drops 5%, you lose ₹3,500 either way. On CNC that's a 5% loss on capital. On MIS, it's a 25% loss on your margin. Same rupees gone, four times the percentage damage. That's the trade-off nobody tells you about when they pitch "20x leverage" in WhatsApp groups.

Five Traps Beginners Fall Into

Across thousands of student trades I've reviewed, the same five mistakes show up over and over. None of them are exotic. All of them are avoidable once you've seen the pattern.

How to Decide, Every Single Time

Before you tap Buy, ask yourself one question: what am I trying to do? The answer points you to the right product type — every time.

That last rule is the most important one. When in doubt, default to CNC. It costs more in capital, but it never costs you in surprises.