KARACHI: The Pakistan Stock Exchange (PSX) posted marginal gains on Wednesday before falling below the 165,000 mark as cautious trading continued amid persistent economic and political uncertainty.

Topline Securities Ltd said the KSE-100 index staged a recovery, gaining 779.35 points, or 0.47 per cent, to close at 165,930.99 after two consecutive sessions of losses. The benchmark traded between an intraday low of 164,732 and a high of 166,242, with selective buying emerging at lower levels.

The rebound reflected renewed buying interest following recent selling pressure. However, the recovery remained measured amid macroeconomicuncertainty, elevated international oil prices, and persistent geopolitical concerns.

United Bank, Hub Power, Habib Bank, Oil and Gas Development Company and Mari Energies were the maincontributors to the index`s gains, collectively adding approximately 493 points.

The auto sector remained the talk of the town, closing in positive territory amid optimism about the new draft Auto Policy 2026-31, whichlifted investor interest in automotive stocks.

Meanwhile, the refinery sector remained under earnings pressure after the government reduced the high-speed diesel crack spread from $41.89 to $38 per barrel for three months.Ali Najib, Deputy Head of Trading at Arif Habib Ltd, said the market gained momentum amid renewed institutional buying, fuelled by optimism about intensified diplomatic ef forts to resolve the US-Iran conflict andexpectations of easing geopolitical tensions.

Additionally, the proposed five-year roadmap for the automotive sector aims to boost automotive exports to $6bn through tariff rationalisation, localisation and EV incentives. The draft also envisages export-linked incentives and stricter safety standards, subject to the requisite approvals, including IMF clearance.

Despite a bullish trend, market activity weakened as trading volume dipped 14.98pc to 379.9 million shares. However, turnover rose 9.54pc to Rs21.2bn.

Pakistan Refinery topped the volume chart with 49.4m shares.

Analysts say institutional buying, optimism about US-Iran diplomacy and renewed interest in auto stocks may sustain the market`s positive momentum. However, geopolitical uncertainty and evolving macroeconomic risks could keep volatility elevated, favouring a selective investment approach.