CNC is the Cash and Carry Order where the entire value of purchase will be blocked as margin required when you place a buy order. What will happen if you, during the course of the day, sell the shares that you have bought under CNC itself.

 In such case, the system will a) occupy full margin for CNC Buy and b) will allow you to sell the same stocks, same quantity under CNC on the same day c) but will not release the margin occupied towards the CNC buy. Let's understand this with an example.

A bought 500 XYC stock at 400 each in the morning under CNC. The system at the placing order itself would occupy a margin of Rupees 20000 towards the purchase. Let's assume that the stock moves up by and he sells the same under CNC to book profits. 

In this case, the system will allow him to sell the stocks without any additional margin requirement as there is a buy leg already created. However, after the transaction is squared off, A will still find the entire purchase value of Rupees 20000 blocked a margin used. This is because, CNC implies Cash and Carry and the CNC sale proceeds, as per the new SEBI regulations, will be released only on  the next day for further exposure. 

Many a times, for this reason, you would have observed that you are unable to utilize the sale proceeds of a stock that you hold in demat account, for further purchase. As per SEBI's regulation, you will be required to have peak margin before you place an order and the sale proceeds are yet to be received from the Exchange and hence, these are not available before you place the order, it is yet to be received.

With the same logic, A's purchase value will continue to be occupied as margin utilized even if he had squared off the stock. The CNC orders are treated as Bought after paying full purchase value and sold with the sale proceeds to be received T+2

Hence, to avail margin benefits, we urge you to place the orders under NRML. Unlike CNC, NRML occupies only 50% of the margin required for selective stocks. You may therefore, before squaring off your position, convert your CNC buy order to NRML using position conversion option and then square it off under NRML

This will help you utilize more margins for further trades. 

Note: This can be done in ITS  as NRML is not available in Rocket.