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Nifty-Gold ratio drops to 1.70 as investors weigh India stocks vs gold
The Nifty 50-gold ratio, which divides the Nifty 50 index by the local price of one gram of gold, has moved from a recent support low of 1.55 to about 1.70, indicating equities have rebounded slightly from oversold levels.
LiveMint Markets reports the Nifty 50-gold ratio has narrowed to 1.70, a level that historically points to Indian equities trading at relatively attractive valuations versus gold. The ratio is calculated by dividing the Nifty 50 index by the price of one gram of gold in India, and a reading below 2 has been associated with gold outperforming stocks, while higher readings imply equities are more expensive relative to the metal.
The outlet notes the indicator is being watched as market volatility rises, with both asset classes influenced by macro factors like inflation, interest rates, government policy, and geopolitical developments. Rising crude oil prices are also in focus, driving expectations that the US Federal Reserve and other major central banks could further tighten policy to curb inflation.
LiveMint Markets adds that on Tuesday, the Nifty 50 fell more than 1% during the session, even as the Sensex rose, citing a divergence that followed India’s regulator SEBI introducing a new auction-based mechanism intended to make price discovery more transparent.
According to Aamir Makda, a commodity and currency analyst at Choice Broking, the ratio has recovered from a recent support low of 1.55, suggesting investor sentiment has shifted and the market is tracking changes in relative risk appetite between equities and gold.
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