Ok after searching for a few while and so many try outs, I found that the error was in my nginx config document root, it must be set to laravel-master/public/
The error I was getting was because the rewritten URLs were forwarded to $document_root/index.php
which is localhost/index.php
which of course does not exist, so changing the document root to my laravel master did the trick and the URLs where rewritten to localhost/laravel-master/public/index.php