What is MIS in Share Market?

In the Indian stock market, there are mainly two ways to trade in the stock market. One way is where you make money slowly and steadily identical to a 5 day test match and you hold these shares for a long time hoping they’ll grow in value over time. This is called investment. 

The other way is where you buy and sell the share on the same day hoping to make small quick profits, it has characteristics like a fast-paced T20 match quick and full of action. This strategy is known as intraday trading and for this fast game, traders use a special tool called MIS.

What is MIS? 

As a trader whenever you open a trading app you might have seen a little option that says ‘MIS’, have you ever wondered what exactly it is? The full form of MIS is Margin Intraday Square-Off where: 

• Margin stands for a small loan from the broker for a day. It helps traders with more money to invest than you have in your account. 
• Intraday stands for within the same day, here any trade that you make using MIS has to be opened and closed on the same day.  
• Square-Off stands for a simple action of closing your trade, meaning the already bought shares shall be sold and if you have sold them first, you must buy them back.

MIS in the stock market is a special order for day traders who borrow margin to increase their investment and shut these trades before the market closes.

How MIS Works? 

Let’s look at an example to learn how MIS works in the stock market, let’s say as an investor you had a strong feeling that Reliance Industries stock will rise today, if the stock is trading at Rs.1,500 and you decide to buy 10 shares. When you open your trading app to place the order, you specifically select the MIS option. This is a signal to the broker that this is a one day trade. But here as an investor you need to sell these shares before the market closes regardless of whether you make profit or loss, as this is the golden rule of MIS where you need to clear everything before the market closing time.

Read Also: What Does CNC, MIS and NRML Mean?

How Does Margin Intraday Square-Off Work?

Now, let’s get to the most powerful and riskiest part of MIS that is the Margin.

Suppose you have Rs.10,000 in your savings account but you want to buy shares of a company worth Rs.50,000 because you have a strong feeling that there will be a price jump today. Here comes the role of MIS where your broker will give you a margin of the remaining Rs.40,000 and will add you Rs.10,000 as a security deposit. Now you can invest this cumulative Rs.50,000 in your desired stock with just spending Rs.10,000 of your own pocket. This power to control a large asset with a small amount of your own money is called leverage. It’s like using a lever to lift a heavy object you couldn’t lift on your own.

In India, brokers generally offer a leverage up to 5 times on stocks for MIS trades. This means for every Rs.1 you have, you can trade with Rs.5. So, with just  Rs10,000, you can command a trading position of Rs.50,000. This is the real use of MIS as it allows traders to aim for bigger profits from small price movements by trading with a much larger sum of money than they personally have.

The Square-Off Mechanism

What if you get caught up in a meeting and completely forgets to sell the shares that were bought using MIS. This is where the “Square-Off” becomes very important.

You can close your MIS position yourself anytime during market hours (9:15 AM to 3:30 PM), this is known as manual square-off. But if you do not close your positions in the given time then your broker will step in and do it for you. This is called an auto-square-off. Most brokers in India have a cut-off time, usually between 3:15 PM and 3:25 PM, after which their systems will automatically close all open MIS positions.

The leverage received to the investors is only for that single day, where you need to settle the books and close the temporary loan. This protects both you and the broker from the massive risk of an overnight price crash. Because the broker has to perform this action for you, they will charge a penalty, typically around Rs.50 + GST, for every order that is auto-squared-off.   

Read Also: What is Intraday Margin Trading?

How to Trade Stocks Using MIS in the Share Market?

Placing an MIS order is straightforward on most modern trading platforms. While the buttons might look a little different on Zerodha Kite, Pocketful, or Angel One, the process is largely the same.

1. Select Liquid Stock: You need to select stocks that are highly traded in the stock market, meaning lots of people are buying and selling them throughout the day. These stocks are known as liquid stocks as they ensure that you can buy and sell your trades easily.
2. Order Window: As an Investor you should log in to your trading app, find the stock you want to trade using the search bar, and tap on ‘Buy’ (if you think the price will go up) or ‘Sell’ (if you think it will go down).
3. Select ‘Intraday’ or ‘MIS’: This is the crucial step where investors see product types like ‘Intraday (MIS)’ and ‘Longterm (CNC)’. You must select ‘Intraday (MIS)’ to tell your broker this is a day trade.
4. Select Quantity and Price: Decide how many shares you want to trade. You will also need to choose an order type meaning either market order or limit order. Where market order means your trade happens instantly at whatever the current market price is. And limit order is set at a specific price and your trade will only happen if the stock reaches that price.
5. Place and Monitor Your Order: Once you’ve placed the order, it will appear in the ‘Positions’ or ‘Orders’ tab of your app and you can easily watch your profit or loss changing in real-time.
6. Square Off Your Position: This is the final and most important part of the trade, where you need to close your trade before the auto-square-off time kicks in. Go to your open position and place an opposite order, let’s say if you bought 10 shares, you must now sell all 10 shares, but if you short-sold 5 shares, you must now buy back 5 shares. This completes your MIS trade.

Benefits of Margin Intraday Square-Off (MIS)

• Bigger Trade Potential: Here Leverage is the main attraction as you can increase your capital up to 5 times increasing your buying power and allowing you to take a significant position in the market with a relatively small amount of capital.
• Higher Profits Potential: As you’re trading with a larger, leveraged amount, even a tiny price movement can result in a handsome profit on your initial capital. Let’s say a 2% profit on a leveraged amount of Rs.50,000 is Rs.1,000. Then you can earn a solid 10% return on your own funds of Rs.10,000.
• No Overnight Risk: As in this you need to close all your positions before the market closes, news and rumours in the after market hours do not affect your profits, since all MIS trades are closed the same day and you are completely protected from any such overnight changes.
• Profit from Short Selling: MIS allows you to do something called ‘short selling’, which means you can sell shares first (even if you don’t own them) at a high price, and then buy them back later at a lower price. The difference is your profit. This is a powerful way to make money even when the market is going down.
• Lower Brokerage Costs: Many brokers offer a discounted brokerage fee for intraday trades compared to delivery trades, which can save you a lot of money if you trade frequently.   

Read Also: Margin Against Shares: How Does it Work?

Risks Associated with Margin Intraday Square-Off (MIS).

1. Amplified Losses

This is the other side of the leverage, just as profits are magnified, losses are magnified too. That same 2% price move that could have made you a 10% profit can also hand you a 10% loss on your capital if it goes against you. A slightly larger adverse move can wipe out your entire trading capital in a matter of minutes.

2. Auto-Square-Off Risk

The market might be temporarily against you, and you might feel it will recover if you just wait a little longer. But with MIS, you don’t have that, the broker’s system will automatically close your position at the cut-off time, forcing you to accept a loss even if you wanted to hold the stock.   

3. The Circuit Limit Trap

This can be a major risk for intraday traders as every stock has a ‘circuit limit’, which is a price band set by the exchange, in this if the stock price hits the top or bottom of this band, trading is halted.

Lets say You Buy a stock and it hits the Lower Circuit, now there are only sellers (like you, desperate to get out) and zero buyers as the stock is drastically falling. In this situation you are stuck and cannot sell your shares. Because your MIS trade cannot be squared off, your broker will be forced to convert it into a delivery trade meaning, you are now obligated to pay the full 100% value of the shares you bought with leverage. If you don’t have enough cash the broker might sell your other holdings or charge you heavy interest until you pay up.

Also when you short-sell and it hits the Upper Circuit. You short-sold a stock, betting that it will fall. But instead of falling, it skyrockets and hits its upper circuit. In this situation there are only buyers and no sellers and you cannot buy the shares back to close your position which is also known as ‘short delivery’. You have failed to deliver the shares you sold. The stock exchange will then hold an auction to buy the shares on your behalf, often at a much higher price, and you will have to bear the cost plus a significant penalty.

4. Mental Pressure

The combination of high speed, high stakes, and the risk of rapid losses can be incredibly stressful. It can push traders to make impulsive decisions driven by fear or greed, which can feel as a huge burden.

MIS vs. CNC

Feature	MIS (Margin Intraday Square-Off)	CNC (Cash and Carry)
Main Purpose	Same-day trading (Intraday)	Investing for more than one day (Delivery)
Holding Period	Must be closed the same day	Can be held for days, weeks, or years
Leverage	Yes, up to 5x leverage is available	No, you need 100% of the money
Auto Square-Off	Yes, broker closes it automatically if you don’t	No, you are in full control of when to sell
Best For	Active traders trying to profit from daily price changes	Investors who want to own shares for long-term growth

Read Also: Best Charting Software for Trading in India

Conclusion

MIS is a powerful tool built for the fast and furious world of intraday trading and it gives traders the option of leverage, letting traders make bigger trades than their own account balance would allow leading to quicker and larger profits.

But with great opportunities comes a great risk. This same leverage can amplify your losses easily and can wipe out your hard-earned money in the blink of an eye. Success with MIS isn’t about luck, it is about deep knowledge, a solid trading plan, and the discipline to manage your risk and emotions on every single trade.   

If you’re just starting out, treat MIS with extreme caution. The smart move is to first learn everything you can, maybe even practice using an online simulation account. Only then should you consider stepping into the MIS, and only with money you are fully prepared to lose.

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