With the help of the Nitrous.io support team, I found the answer to this.
In your config/environments/development.rb
file, you need to set the config variable,asset_host, that tells the app where to load the assets. For example if your ip address of the nitrious.io preview page is http://test-rails-xyz.apse2.actionbox.io/
then:
config.asset_host = 'http://test-rails-xyz.apse2.actionbox.io/'