I’m observing for the past few days that the NAV of SBI Magnum GILT fund is changing daily. Does the interest rate change daily to cause the NAV change?
yes.
Most GILT are daily traded in market, like stocks. While variation in prices are not as high as stocks, there is still a variation
So in turn their prices (and accordingly YTM) also changes frequently in a day.
Depending on day end prices, NAV of funds holding it also changes.