The benchmark KSE-100 index gained 1,018.24 points or 2.54% within a couple of hours after the market opened.

The index broke the psychosocial barrier of 41,000 and was hovering at 41,100.65 at around 11am.

The trend continued throughout the day and the market closed 1,371.78 points, or 3.42%, high at 41,437 points.

The rally came a day after the National Assembly passed a revised budget draft for the fiscal year 2023-24. The government amended the budget proposal to accommodate some of the demands from the International Monetary Fund (IMF).

Related: Parliament approves revised budget to clinch IMF deal

It has introduced additional taxes of Rs215 billion in the federal budget and reduced government expenditure by Rs85 billion.

The changes will likely pave the way for an agreement between the Fund and Pakistan, which has evaded a default since May last year with the support of friendly nations like China, Saudi Arabia, and the UAE.

Experts have attributed the rally to budget changes.

“The change of sentiment comes amid a series of developments in recent days, which indicates that the IMF deal is moving in a positive direction,” Sana Tawfik, an analyst at the Arif Habib Limited (AHL), told Business Recorder.