Shares in Pakistan rose on Thursday, a day after the government unveiled the budget, which perked up investors by skipping an anticipated increase in capital gains tax, despite an ambitious tax revenue target.

The benchmark share index rose more than 4% to 76,037 points after presentation of the budget, which looks to raise tax revenue of 13 trillion rupees ($47 billion) for the year starting July 1, up nearly 40% from the current year.

"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 Co.

After the budget and Monday's cut of 150 bps in the central bank's policy rate, the market could see a record day as "equities are the best option for the medium term", Sheikh added.

Apart from the capital gains tax, analysts say the budget and other revenue measures were in line with expectations.

The budget aims to strengthen the case for a new bailout deal from the International Monetary Fund (IMF), as Pakistan seeks an estimated loan ranging from $6 billion to $8 billion, to avert default in an economy growing at the region's slowest pace.

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

If parliament passed the budget in compliance with IMF measures, Topline said it expected a forward price to earnings ratio of 6.93 in three years time, for a historic high, from 3.4 now.

Pakistan's international sovereign bonds also rallied with longer-dated maturities enjoying the largest gains. The 2036 bond added 1.4 cents - its biggest gain in more than two months - to be bid at just over 77 cents in the dollar, Tradeweb data showed.

Defending the decision to boost tax revenue, Finance Minister Muhammad Aurangzeb said the present tax-to-GDP ratio of a little under 10% was not sustainable.

Key objectives for the upcoming fiscal year include efforts to increase the ratio gradually to 13% in the next three years, Aurangzeb told a press conference after presenting the budget in parliament. (Reporting by Ariba Shahid in Islamabad; Editing by Michael Perry and Clarence Fernandez )