The derivative research from ICICI Direct suggests that a move above 8630 is likely to induce short covering in the next week, which is the expiry week for March series.
It's weekly derivative report says that during the week ended Friday 20th March 2015, the Nifty failed to sustain at higher levels. It couldn't sustain above Budget lows of 8750. Despite some positives from the FOMC meet, selling pressure continued at higher levels and it closed the week below 8600. Nifty ended 1% lower at 8570 on Friday.
However, the report mentions that the volatility index remained subdued despite the Nifty trading near its month low levels. It indicates that downsides may be limited as option writing is visible in near the money strikes for the March series.
The options accumulation pattern has shifted downwards and the 8800 Call option base has grown significantly to 52 lakh shares where more than 15 lakh shares were added during the week. Among Put options, strikes from 8600 to 8400 have close to 50 lakh shares each. Hence, ICICI Direct believes that sustainability below 8600 may extend the selling pressure during the settlement week. The broking firm suggests that a move above 8630 would only lead to short covering during the settlement week. (Share Manthan, 20th March 2015)
