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BENGALURU  - Indian shares hit all-time highs on Friday, ahead of a central bank decision that could potentially leave interest rates at record lows, with investors keeping a close eye on the apex bank's stance on liquidity.

The Reserve Bank of India (RBI), which has slashed its main repo rate by 115 basis points since March 2020 to cushion the impact of the COVID-19 pandemic, was expected to keep its benchmark lending rate at 4% through at least 2023, according to a Reuters poll.

The Nifty PSU Bank index, which tracks state-run lenders, jumped more than 6%, with shares of State Bank of India surging 10% to hit an all-time high. The lender on Thursday logged a 7% fall in quarterly net profit, but beat analysts' estimates.

The NSE Nifty 50 index rose as much 0.74% to 15,005.95 and the S&P BSE Sensex was up 0.7% at 50,979.82 by 0350 GMT. Both the indexes scaled record highs early on Friday.

Benchmark indexes had also closed at record highs on Thursday and were set to finish the week over 9% higher, boosted by optimism around the federal budget, which saw a host of measures to revive the pandemic-hit economy.

The pandemic is expected to trigger India's biggest annual economic contraction in decades, and high inflation remains a cause of concern.

Earlier this week, in the federal budget, India announced additional market borrowing and proposed doubling healthcare spending, recapitalisation of public-sector banks and divestment of some state-owned lenders, in a bid to bolster the economy.[L4N2K720O]

Economists and market participants will keenly listen to the RBI's commentary on liquidity measures, as well as its forecasts on growth and inflation.

(Reporting by Chandini Monnappa in Bengaluru; editing by Uttaresh.V)