It was explained by Ernst Munch.
According to this hypothesis, the active transport of sucrose from mesophyll cells of leaf (load) to the companion cells and sieve tubes of phloem decreases the water potential in the phloem. This results in entry of water into sieve tube from adjacent xylem vessels by osmosis.
Due to entry of water, hydrostatic pressure builds up in the phloem which causes the movement of sucrose from phloem to sink i.e. other cells such as stem cells or root cells by active transport.
This results in increase in water potential inside the phloem and thus water moves out of the phloem by osmosis.