KARACHI: Pakistan's benchmark share index rose 3% in early trade on Thursday to 74,986, a day after the government presented its annual federal budget, which included an ambitious tax revenue target but no change to capital gains tax.

Pakistan's budget will seek to raise tax revenue of 13 trillion rupees ($46.66 billion) for the year starting July 1, a near 40% jump from the current year.

The budget is aimed strengthening the case for a new bailout deal with the International Monetary Fund (IMF).

"The market was expecting an increase in capital gains tax and so investors had reduced exposure significantly," said Adnan Sheikh, assistant vice president of Pak Kuwait Investment Company.

Following the budget and the 150 bps policy rate cut on Monday, the market may even witness a record day as "equities are the best option for the medium term", Sheikh said.

Other than the capital gains tax, analysts believe the budget and other revenue measures are in line with expectations.

Pakistan remains engaged in talks with the IMF for a loan estimated to be anything between $6 billion to $8 billion to avert a default for an economy that is growing at the slowest pace in the region.

"We believe, this budget will serve as a prior action for new IMF programme," said Topline Securities in a note.

It added that subject to successful passage of the budget in compliance with IMF measures Topline expects the forward price to earnings ratio to rerate to a historic high of 6.93x in three years time, from the current 3.4x. (Reporting by Ariba Shahid in Karachi; Editing by Kim Coghill, Janane Venkatraman and Michael Perry )