Indian shares bounced back from a bout of profit-booking and settled at record closing highs on Thursday, lifted by high-weightage financials and information technology stocks, ahead of the central bank's policy decision on Friday.

The blue-chip NSE Nifty 50 was up 0.36% to 22,514.65, while the S&P BSE Sensex added 0.47% to 74,227.63.

Both the benchmarks rose about 0.7% each, hitting fresh record highs at the open, before surrendering gains, as profit booking emerged.

However, they recovered to close at record high levels, supported by high-weightage financials, which rose 0.83%.

"The surge to record highs highlights positive trends in the Indian stock market," said Sonam Srivastava, founder and fund manager at Wright Research Portfolio Management Services.

HDFC Bank, India's top private lender and the heaviest stock in Nifty 50 index, added 3.06% as its deposits grew sequentially in the March quarter. The stock was the top Nifty 50 gainer.

"Optimistic outlook for the upcoming earnings season from strong business updates is also contributing to positive sentiment," Srivastava added.

Financials, as well as other rate-sensitives like realty and consumer stocks will remain in focus, with the Reserve Bank of India (RBI) expected to hold rates steady at its monetary policy decision on Friday, according to a Reuters poll of economists.

While the rate pause is a given, RBI's commentary on the inflation outlook will be crucial, especially for consumer stocks, said analysts.

The second-highest weighted information technology sub-index gained 1.08% on the day.

IT stocks have added about 2% in two days on the back of several stock upgrades by CLSA and JP Morgan.

Among stocks, upstream oil companies like Oil & Natural Gas Corporation and Oil India dropped 2.1%-2.5%, after the government hiked the windfall tax on petroleum crude for the fifth time since February.

ONGC was the top Nifty 50 loser and dragged the oil & gas index 1.37% lower.

(Reporting by Bharath Rajeswaran and Kashish Tandon in Bengaluru; Editing by Sherry Jacob-Phillips and Sonia Cheema)