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Indian shares are set to open marginally higher on Thursday, with the benchmarks closing in on all-time highs, ahead of the Reserve Bank of India's monetary policy decision, where the central bank is widely seen holding key rates steady.

India's NSE stock futures listed on the Singapore exchange were up 0.08% at 18,827.50, as of 7:50 a.m. IST.

The RBI's rate decision is due to be announced at 10:00 a.m. IST. The monetary policy committee (MPC) is expected to leave the repo rate at 6.50% for a second straight meeting.

The central bank has raised the repo rate by a total of 250 basis points since May 2022 to keep inflation in check, before opting for a pause at the previous meeting.

India's retail inflation eased to an 18-month low of 4.70% in April, well below the RBI's upper tolerance level. Economists expect the next few readings to be comfortably below the 6% threshold, bolstering hopes of a sustained pause in the rate cycle.

"The central bank will likely emphasise the primary objective of controlling inflation, indicating flexibility to raise rates if inflation rises above the tolerance limit," said Sharad Chandra Shukla, director at Mehta Equities.

Both the Nifty 50 and Sensex are below 1% of all-time high levels. The broader smallcaps and midcaps hit fresh record-highs on Wednesday.

Wall Street equities closed lower overnight after logging a 13-month high, as profit-booking set in ahead of inflation data and the rate decision from the U.S. Federal Reserve next week.

The Fed is expected to refrain from raising rates following a slew of mixed economic data. The European Central Bank and Bank of Japan will also announce their monetary policy decisions next week.

STOCKS TO WATCH

** Tech Mahindra: Life Insurance Corporation of India raises stake in the information technology firm to 8.884% from 6.869%.

** Mazagon Dock Shipbuilders: Co signs an agreement with Thyssenkrupp to participate in a submarine tender by Indian Navy, that sources said has a value of $5.2 billion.

** Tata Elxsi: ISRO awards Gaganyaan Mission Mandate to company to deliver Crew Module Recovery Models (CMRM).

** Lemon Tree Hotels: Co signs license deal for 60-room property in Andhra Pradesh.