Introduction:
The water divide between the Indus and Ganga river system is a significant geographical feature in India. It marks the boundary where the water flow separates into two major river systems. Several places in India are located on this water divide, but the correct answer is Ambala.

Explanation:
Ambala:
Ambala is a city and a municipal corporation in the state of Haryana, India. It is located on the water divide between the Indus and Ganga river system. The city is situated at the northern tip of Haryana and serves as a gateway to Himachal Pradesh and Punjab. The Ghaggar-Hakra River, a tributary of the Indus, flows close to Ambala. On the other side, the Yamuna River, a tributary of the Ganga, flows relatively nearby. Therefore, Ambala is strategically positioned on the water divide between these two river systems.

Other Options:
Nainital:
Nainital is a popular hill station located in Uttarakhand, India. While Nainital is known for its scenic beauty and the famous Naini Lake, it is not situated on the water divide between the Indus and Ganga river system.

Haridwar:
Haridwar is an ancient holy city situated in Uttarakhand, India. It is a significant pilgrimage site and is considered one of the seven holiest places in Hinduism. Haridwar is located on the banks of the Ganga River and is not situated on the water divide between the Indus and Ganga river system.

Ranikhet:
Ranikhet is a hill station located in the Almora district of Uttarakhand, India. It is known for its natural beauty and panoramic views of the Himalayas. However, Ranikhet is not situated on the water divide between the Indus and Ganga river system.

Conclusion:
The correct answer to the question is Ambala. It is located on the water divide between the Indus and Ganga river system and serves as a significant geographical landmark in India.