A Simple Market Ratio
There is some very interesting data when we compare Nifty and gold. This data looks at the ratio between Nifty and gold prices.

A few years ago, this ratio was around four to four and a half. Now, it has come down close to two. This change is important because it shows how equity and gold are valued against each other over time.

What Happened in the Past
In the past, this ratio has fallen below two many times. This happened in the years around 1996–97, 2002, 2008, 2011 to 2013, and even during the COVID period. Each time the ratio went below two, Nifty later did very well. History shows a clear pattern that is hard to ignore.

Strong Returns After the Signal
When this ratio fell below two earlier, Nifty gave strong returns. On average, Nifty delivered about 37 percent gains within the next twelve months. Out of the last seven to eight times, this pattern worked in seven cases. This shows a very high chance that Nifty performs well after such levels.

Is Gold Still Too Strong?
Right now, Nifty does not look expensive when compared to gold. Gold has seen strong buying due to global events. Many central banks are buying gold, and it has become a neutral and safe asset. Because of this, the ratio may go even lower for some time.

Why Equity May Shine Ahead
Slowly, a time will come when equity starts to look cheap compared to gold. When this happens, interest in Nifty can rise again. From there, a strong rally in Nifty is very much possible. History suggests that such phases often reward patient investors.