Your daughter, is an Indian if she follows any of these:

Citizenship by birth: if she was born in India

Citizenship by descent: if she was born on or after 10th December 1992 outside of India but was born to either parent who is Indian citizen

Then there are Citizenship by registration and  naturalization. If you fall under any of the mentioned categories, then she should opt Indian as your nationality.

Now about the NRI Category:

If your daughter is an Indian citizen and has been studying abroad only for a specific period of time, she still qualifies as an Indian National. An NRI is someone who has been away for an indefinite period of time either for business, vocation or employment reasons. Staying abroad for educational purposes doesnt put her in the NRI Category.