Won't rule out a 15% fall in mkts over 2 months: JM Fin

He does not see the Dow crossing 9,800-9,900 levels post recovery. "We have a target of 9,000 and 950 on the Dow and S&P, respectively."

Road ahead for India:
Shah remains cautious on Indian markets as he sees them breaking down. "The Nifty may break below 5,050 in the near-term. A 15% fall over the next two months cannot be ruled out."

Sector watch:
Metals is looking the weakest on the charts, Shah said. "The Metals index can lose 15% in the near-term."

He sees a similar 10-15% fall in Big IT.

For the medium-term, he is positive on crude and advises a buy around USD 65 per barrel.

Here is a verbatim transcript of the exclusive interview with Gautam Shah on CNBC-TV18. Also watch the accompanying video.

Q: We have had a couple of quiet sessions, do you think we are building up for a big move?

A: Yes, it does look like we are building up for a move. In fact the trading action of the last one week we have seen the mid-cap outperform and the large-caps go nowhere, even the index has been in a very tight range of about 50-100 points. The way we have been reading the chart, we maintain our cautious stance and we believe that this market has the potential to breakdown.

I think the immediate levels to be watched on the Sensex and Nifty are 5,200 and 17,400. In the recent past, we have seen the market rebound from these levels many times. But with the global setup anyway continuing to look weak on the charts, I guess we could be in for a breakdown anytime in the next few days. Once that happens in the near-term itself, we could see the market go down to levels of 5,050 and maybe below levels of 17,000 on the Sensex.

The bigger picture setup itself has not been looking to encouraging, we turned bearish early in the month of May. Despite this recovery, we maintain a medium-term cautious stance on the market. We think that it still makes sense to be substantially in cash because for the first time in 15 months, the market is finding it difficult to make a higher high. If you look at the previous corrections and recoveries, the market does not take time to recover and make a higher high, but this time there has been a lot of resistance in that 5,300-5,400 band. I am getting the feeling that we could be in for a Dow theory sell trigger over the next few months and still would not rule out a loss of more than 15% for the market in the next few months.