Apple Pencil not working with SideCar

I work with a M2 Macbook Pro and iPad Air (4th Gen). Until a week ago, I regularly used my iPad as an extended display using SideCar (Continuity). Worked charmingly, including with Apple Pencil. Recently updated to Mac OS 14.4, and Apple Pencil no longer reacts to the desktop display on the iPad, but works with the SideBar and TouchBar. Finger tap on the display has no response either, but scrolling using two fingers works fine. Essentially, I am reduced to interacting with my iPad using my Mouse and Keyboard. Any hints on how to resolve this?