Short answer

When you hold both delivery (CNC) and MTF holdings in the same stock, the system sells your oldest holdings first when you square off any position or holdings, regardless of which product type you’re trying to sell from. This follows the FIFO (First In, First Out) principle as required by the Income Tax Department.

FIFO selling priority example

Here’s how the FIFO principle works in practice:

Your transactions

1st January: You buy 10 shares of Reliance as delivery (CNC) at ₹1,350

15th January: You buy 10 shares of Reliance as MTF at ₹1,300

20th January: You decide to sell 10 shares of Reliance in MTF when the price is ₹1,320

What happens when you sell

According to FIFO, the system sells your 1st January purchase first, not your MTF holdings. This results in a loss of ₹30 per share instead of the ₹20 profit you might have expected from selling the MTF holdings purchased on 15th January.

Expected result: ₹20 profit per share (₹1,320 - ₹1,300)

Actual result: ₹30 loss per share (₹1,320 - ₹1,350)

The system automatically applies FIFO regardless of your intention to sell from MTF holdings specifically.