In Axis Direct, CNC stands for Cash N Carry, representing a crucial order type for investors looking to buy or sell shares for delivery in the equity market. It is fundamental for anyone aiming to hold shares for more than one trading day, distinguishing it from speculative or intraday trading.
Understanding Cash N Carry (CNC)
The Cash N Carry (CNC) order type is specifically designed for transactions where you intend to take actual delivery of shares into your demat account (when buying) or deliver shares from your demat account (when selling). This means you become the legal owner of the shares or fulfill your obligation by delivering shares you already own.
Key Definition:
The full form of CNC is Cash N Carry, and the CNC is used in the Equity Segment of BSE & NSE. It is used for buying or selling shares for delivery.
How CNC Functions in Axis Direct
As a prominent brokerage firm, Axis Direct facilitates trading on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). When you place a CNC order through Axis Direct:
- For Buying: You must have the full amount of funds available in your trading account to cover the cost of the shares. Once the order is executed, the shares are purchased and typically credited to your demat account within T+1 or T+2 trading days (Transaction Day + 1 or 2 days).
- For Selling: You must already possess the shares in your demat account that you intend to sell. Upon successful execution, these shares are debited from your demat account, and the sale proceeds (after deducting brokerage and taxes) are credited to your trading account.
Core Characteristics of CNC Orders
Understanding the unique attributes of CNC orders is vital for effective long-term investing:
- Delivery-Based Trades: This is the primary characteristic. Shares bought or sold under CNC are intended for actual delivery and ownership transfer.
- Full Payment Required: When buying, you need to pay 100% of the transaction value upfront. CNC orders do not typically involve leverage or margin funding for holding positions overnight.
- No Intraday Obligations: Unlike Margin Intraday Square-off (MIS) orders, CNC positions are not automatically squared off by the broker at the end of the trading day. You can hold these shares for as long as you wish – days, weeks, months, or years.
- Long-Term Investment Focus: CNC is the preferred order type for investors with a long-term perspective, aiming for wealth creation through capital appreciation, dividends, and other corporate actions.
- Eligibility for Corporate Actions: As a registered owner of shares bought via CNC, you are eligible for dividends, bonus issues, stock splits, rights issues, and voting rights.
CNC vs. Other Order Types (Context for Axis Direct Users)
| Feature | CNC (Cash N Carry) | MIS (Margin Intraday Square-off) |
|---|---|---|
| Purpose | Buying/Selling shares for delivery (long-term holding) | Intraday trading (buy & sell on the same day) |
| Ownership | Shares transferred to/from demat account | No transfer to demat account; position squared off |
| Funding | 100% upfront payment | Leverage/Margin allowed; only a percentage of trade value needed |
| Holding Period | Indefinite (more than 1 day) | Must be closed before market close on the same day |
| Risk Profile | Lower (no forced liquidation due to margin calls) | Higher (risk of forced square-off, significant losses if market moves against position) |
Practical Implications for Axis Direct Clients
For investors using Axis Direct, selecting the CNC order type means:
- Commitment to Ownership: You intend to take physical possession of the shares.
- Long-Term Strategy: You are aligning with a strategy that allows you to benefit from the company's growth over time.
- No Margin Calls (for buying): Since you pay in full, you won't face margin calls for your CNC buy positions due to market fluctuations.
- Capital Requirements: Ensure your trading account has sufficient cleared funds before placing a buy order.
In essence, CNC in Axis Direct is your gateway to becoming a true shareholder, enabling you to invest for the long haul and participate fully in the equity markets.
