ESDS rally sparks 5.19% NAV jump in Motilal Oswal Digital India Fund

The fund received an anchor allocation of 10.25 lakh shares in the ESDS IPO at ₹429 apiece, worth about ₹44 crore. The investment accounted for nearly 5% of the fund’s assets of around ₹907 crore as of July 31, 2026. ESDS Software more than doubled from its issue price on September 4, closing at ₹908.40, a gain of nearly 112%. The surge helped lift the fund’s NAV by 5.19% in a single day, even as the benchmark Nifty 50 gained just 0.1%.

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“One of our anchor allocations from a recent IPO in this space saw a strong listing, which contributed to the fund’s NAV movement on the day,” said Motilal Oswal Mutual Fund‘s Varun Sharma, who manages the Digital India Fund.

The fund’s NAV could get a further boost after ESDS Software remained locked at the 20% upper circuit at ₹1,090.05 on Monday. Based on the fund’s exposure to the stock, the latest rise could translate into an additional gain of around 1% for unitholders, assuming other portfolio holdings remain unchanged.

Such sharp single-day gains in equity fund NAVs are rare, as schemes typically spread their investments across a diversified portfolio of stocks to limit the impact of sharp moves in any single holding. A 6-7% upmove in a fund’s NAV is usually 30-50% of a diversified equity scheme’s average annual gains.

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Among the fund’s top holdings are Eternal, PB Fintech, Coforge, Hexaware Technologies and One97 Communications. Motilal Oswal Digital India Fund invests across the broader technology ecosystem, spanning digital, internet, artificial intelligence, software and platform-led business models.Sharma said 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.”

Technology funds have underperformed over the past year amid AI-led disruption, a sharp rotation away from momentum sectors and a cooling-off in elevated valuations. The BSE IT TRI has declined 13.83% in the past year, while Motilal Oswal Digital India Fund has gained 3.29%.