The index touched an intraday high of 890 points and a low of 269 points before settling higher at the closing bell.

According to a report by Topline Securities, investor sentiment improved significantly, driven by positive economic indicators.

A major catalyst was the sharp decline in annual inflation, which dropped to a decade low of 1.5% year-on-year in February.

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The inflation figures boosted expectations of an accommodative monetary policy, further supporting market gains, it added.

Buying interest surged in key sectors as investors capitalised on recent dips.

United Bank Limited (UBL), Mari Petroleum (MARI), Fauji Fertilizer Company (FFC), The Searle Company (SEARL), and Hub Power Company (HUBC) led the recovery, collectively contributing 400 points to the index.

The pharmaceutical sector also witnessed strong buying activity, with SEARL, BF Biosciences (BFBIO), and Citi Pharma (CPHL) closing higher than their previous day’s levels.

Despite the bullish momentum, overall market activity remained lackluster, with 206 million shares changing hands and a total turnover of Rs11.3 billion.

WorldCall Telecom (WTL) led the volume charts, with 12.5 million shares traded.

Market analyst Ahsan Mehanti of Arif Habib Corp attributed the rebound to optimism surrounding the inflation figures.

“Stocks recovered as investors weighed over a decade-low CPI inflation at 1.5% year-on-year in February, which is likely to influence IMF discussions and pave the way for an easier monetary policy by the State Bank of Pakistan (SBP),” he said.

He added that a strong earnings outlook for blue-chip banking, fertiliser, and oil stocks, along with government deliberations over the privatisation of state-owned enterprises (SOEs), played a key role in driving the bullish close at the PSX.