BENGALURU (Reuters) - Indian shares are set for a muted start on Thursday after hitting record highs in the previous session, though private sector banks were set to extend their rise after a Macquarie upgrade on key lenders.

The GIFT Nifty was trading at 23,517 as of 08:40 a.m. IST, indicating that the benchmark Nifty 50 index will open near its close of 23,516 on Wednesday.

Both the Nifty 50 and S&P BSE Sensex hit record highs in the previous session before surrendering gains as investors sold on profit across most sectors.

Meanwhile, analysts expect the benchmarks to remain near current levels and trade range-bound after recent rally.

"With positives already factored in, the market's attention has shifted to policy announcements in the upcoming budget to break its range-bound trend," said Shrey Jain, founder and chief executive at SAS Online, India's deep discount broker.

Analysts also expected June quarter earnings season, beginning second week of July, to be a key factor influencing markets trajectory in the upcoming days.

The country's private banks will be in focus again after Macquarie upgraded Kotak Mahindra Bank and City Union Bank, preferring to stick with private sector banks over other financials.

The sub-index rose 2% on Wednesday.

Both foreign and domestic investors were net buyers for the third straight session on Wednesday, purchasing stocks worth 79.08 billion rupees ($948 million) and 71.08 billion rupees, respectively.

Foreign institutional investors have turned net buyers in June, with buying emerging after election results indicated policy continuity.

Asian peers were muted, taking a pause after the MSCI Asia ex-Japan index hit a two-year high in the previous session, while U.S. markets were closed on Wednesday for a local holiday. [MKTS/GLOB]


** Sun Pharma: Company's Dadra facility receives warning letter from U.S. drug regulator.

** Indian Oil Corporation: Company announces joint venture with GPS Renewables to convert organic waste into compressed biogas.

** Brigade Enterprises: Brigade group signs deal to develop project worth 1.5 billion rupees at Kochi.

($1 = 83.4390 Indian rupees)

(Reporting by Kashish Tandon and Bharath Rajeswaran in Bengaluru)