Motilal Oswal Digital India Fund NAV jumps 10% in five days. What’s driving the rally?

The Net Asset Value (NAV) of Motilal Oswal Digital India Fund has risen sharply over the past few trading sessions, gaining around 10% in five days, driven largely by the continued rally in ESDS Software Solution, a recent IPO holding of the technology-focused mutual fund.

The net asset value of this tech sector-based fund was Rs 10.5256 on September 4 and went up to Rs 11.0770 on September 10. ESDS Software made its stock market debut on September 4.

ESDS Software on its debut day closed at Rs 908.40, more than doubling from its IPO price and delivering a gain of nearly 112% on the listing day. The sharp move helped the Motilal Oswal Digital India Fund’s NAV rise 5.19% in a single day, while the Nifty 50 gained only 0.1%.


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The rally in ESDS did not stop after its debut. The stock subsequently continued to hit the upper circuit, with shares touching Rs 1,090.05 on September 7. Based on the fund’s exposure, the additional rise is estimated to potentially add around 1% to the fund’s NAV, assuming other portfolio holdings remained unchanged.

The fund had received an anchor allocation of 10.25 lakh shares in the ESDS Software IPO at Rs 429 apiece, involving an investment of around Rs 44 crore. The holding accounted for nearly 5% of the fund’s assets of about Rs 907 crore as of July 31, 2026.

Why does one stock have such a big impact?

The sharp movement in the fund’s NAV highlights the impact that a sizeable holding can have on a thematic fund when the underlying stock witnesses a steep rally.

Motilal Oswal Digital India Fund invests across the broader technology ecosystem, including digital businesses, internet companies, artificial intelligence, software and platform-led businesses. Its other major holdings include Eternal, PB Fintech, Coforge, Hexaware Technologies and One97 Communications.

Varun Sharma, Fund manager of Motilal Oswal Digital India Fund, told ET Bureau that while a single stock has driven the recent sharp movement, the fund’s focus remains on identifying well-run, scalable businesses with long-term structural growth potential rather than on any single event or listing.

Sharp NAV moves are unusual

A rise of this magnitude in a single equity mutual fund is relatively uncommon because diversified schemes typically spread their investments across several stocks, limiting the impact of any one company's sharp price movement.

The ESDS rally, however, had a meaningful impact because the fund had secured the shares at the IPO price and the stock more than doubled immediately after listing. The fund's NAV therefore reflected the sharp increase in the market value of this holding.

Technology funds have faced pressure

The recent rally comes against a backdrop of relatively weak performance for technology-focused funds. Technology stocks have faced pressure from concerns around AI-led disruption, rotation away from momentum sectors and elevated valuations.

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The BSE IT TRI had declined 13.83% over the previous year, while the Motilal Oswal Digital India Fund had gained 3.29% during the same period, according to the original report.

The recent jump in the fund’s NAV, therefore, has been driven largely by the exceptional performance of ESDS Software rather than a broad-based rally across the technology portfolio.

For investors, the episode also highlights how thematic funds can experience sharper NAV movements when individual holdings see large price swings. While such moves can boost returns quickly, they can also increase volatility when the underlying stocks correct.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times.)

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