``The market in the coming months would be driven by events like union budget in February, the passage of important bills relating to opening-up of insurance sector, passage of patents Bill and share buy-back,'' the broking arm of the HSBC group said in its monthly update for January.

The recommendations of the Deepak Parekh committee on UTI-64 scheme and elections in the state of Maharashtra and Andhra Pradesh towards the end of the year, would also have a major impact on the market, it said.

Though it was difficult to ascertain the inflows from foreign institutional investors (FIIs), any major sell-off at current levels (Sensex at 3,200) is ruled out, it said. ``Share buyback could potentially induce more liquidity in the market, when legalised over the year. Thesuccessful operations of the depository will help the flow of funds as well,'' it said. On the monetary conditions in the country, HSBC Securities said, low international oil prices had benefited both the interest rate and foreign exchange rate environment. Interest rates were expected to remain flat or go up marginally in this quarter as deposit growth continued to be robust and commercial demand slack, it said.

The sectoral update of HSBC Securities remained upbeat on software and pharmaceutical and said corporates undertaking restructuring would outperform.

The other sectors which it said were expected to perform well were automobile (two-three wheelers), downstream oil, food and beverages and tobacco, personal care, pesticides/agrochemicals and telecom.

However, sectors like steel, power, hotels, banks and financial institutions, cement and automobiles (four wheelers) are expected to be constrained and perform not so well, according to HSBC.