* Monetary policy decision expected at 0615 GMT
* IndusInd Bank top gainer on both indexes
* Nifty PSU bank index gains 0.69%
By Sachin Ravikumar
BENGALURU, Oct 4 (Reuters) - Indian shares rose on Friday ahead of a likely interest rate cut by the central bank in the backdrop of slowing economic growth, with beaten-down banking stocks leading gains.
The Reserve Bank of India (RBI) is expected to cut benchmark interest rates for the fifth time this year as benign inflation offers room for more easing and fiscal measures to revive growth seem largely inadequate.
The RBI is predicted to lower its key lending rate, or the repo rate, by 25 basis points (bps) to 5.15%, which would take cumulative cuts so far this year to 135 bps.
The broader NSE index was up 0.37% at 11,355.75 by 0408 GMT, while the benchmark BSE index was 0.46% higher at 38,280.73. Meanwhile, the rupee was stronger by 0.13% against the dollar at 70.8375.
Asia’s third-largest economy grew by just 5% in the June quarter, its slowest pace in more than five years, prompting the government to take measures aimed at boosting growth.
A sharp cut in the corporate tax rate - to 22% from 30% - last month brought cheer to markets, but economists say the move will do little to address a lack of spending power.
“The moves in the market largely reflect the optimism that will come from the monetary policy announcement,” said Saurabh Jain, assistant vice president at SMC Global Securities in New Delhi.
Leading stock indexes higher on Friday were banks, which have suffered bruising declines over the past fortnight.
The Nifty PSU index, which tracks state-run lenders, was up 0.69%, having fallen about 12% over the past 10 sessions.
With a 2.5% rise, shares in private-sector lender IndusInd Bank Ltd were the top gainers on the NSE and BSE indexes. (Reporting by Sachin Ravikumar; Editing by Subhranshu Sahu)