The Nifty-gold ratio has narrowed to 1.6, signaling potential strength in Indian equities according to market experts. Based on the Nifty's previous close of 24,584 and domestic spot gold prices of ₹1,50,208 per 10 grams on August 10, this ratio has slipped further to 1.6. Historically, whenever the ratio falls below 2.5, the benchmark index has tended to witness a healthy upside, as reported by market analysts.
Domestic spot gold prices are up 13% year-to-date compared to a 6% fall in equity benchmark Nifty 50, highlighting the divergent performance between the two asset classes. The current low ratio shows how strongly gold has performed compared with equities, supported by safe-haven demand and increased expectations of a low-interest-rate scenario, according to market reports.
Market experts view this ratio as a measure of relative performance rather than a valuation signal. Vishnu Kant Upadhyay from Master Capital Services noted that history suggests such extreme levels may favour equities, but it is not a timing indicator. Apurva Sheth from SAMCO Securities believes the Nifty-to-gold ratio has declined over the last two years primarily due to equity declines, and now suggests equities are poised for a comeback from current levels.
Risk appetite of investors is improving due to factors including healthy Q1FY27 revenue growth, fresh buying in the IT sector, strength in the broader market, easing tensions in West Asia, and FPIs turning net buyers. For equities, strong core-sector earnings, FPI buying, comfortable large-cap valuations and wider market participation support a move towards 25,000–25,200 on the Nifty, according to market analysts.
Despite the ratio favoring equities, experts remain positive about gold prospects. Upadhyay believes MCX gold could move towards ₹1,60,000, with rupee weakness providing additional support. Dasani expects consolidation and tactical profit-booking phases in gold after its run, with the $3,900 to $4,000 zone as the accumulation band, rather than a bear turn, as reported by market analysts.
