#assets

A good next step would be to check this against the recommended nginx configuration in d.o docs and update it if necessary.

Thank you dvmanjunath
Finally a configuration that works properly!!

I was able to resolve aggregation issue by adding below configuration changes to nginx file and given permissions to "files" folder

Drupal Version - 10.4.6
Web Server - nginx/1.26.3
PHP Version - 8.3.19

chmod 775 -R /opt/drupal/web/sites/default/files

server {
    listen 80 default_server;

    client_max_body_size 100m;

    root /opt/drupal/web;

    index index.php index.htm index.html;

    sendfile off;
    error_log /var/log/nginx/error.log info;
    access_log /var/log/nginx/access.log;

    location / {
        absolute_redirect off;
        try_files $uri $uri/ /index.php?$query_string;
    }

    location @rewrite {
        rewrite ^ /index.php;
    }

    location ~ ^/sites/.*/files/styles/ {
        try_files $uri @rewrite;
    }

    location ~ '\.php$|^/update.php' {
        fastcgi_split_path_info ^(.+\.php)(/.+)$;
        fastcgi_pass 127.0.0.1:9000;
        fastcgi_buffers 16 16k;
        fastcgi_buffer_size 32k;
        fastcgi_param SCRIPT_FILENAME $document_root$fastcgi_script_name;
        fastcgi_param SCRIPT_NAME $fastcgi_script_name;
        fastcgi_index index.php;
        include fastcgi_params;
        fastcgi_intercept_errors off;
        fastcgi_read_timeout 10m;
        fastcgi_param SERVER_NAME $host;
        fastcgi_pass_header "X-Accel-Buffering";
        fastcgi_pass_header "X-Accel-Charset";
        fastcgi_pass_header "X-Accel-Expires";
        fastcgi_pass_header "X-Accel-Limit-Rate";
        fastcgi_pass_header "X-Accel-Redirect";
    }

    location ~* /\.(?!well-known\/) {
        deny all;
    }

    location ~* (?:\.(?:bak|conf|dist|fla|in[ci]|log|psd|sh|sql|sw[op])|~)$ {
        deny all;
    }

    location ^~ /system/files/ {
        log_not_found off;
        access_log off;
        expires 30d;
        try_files $uri @rewrite;
    }

    location ~* \.(jpg|jpeg|gif|png|ico|cur|gz|svg|svgz|mp4|ogg|ogv|webm|webp|htc)$ {
        try_files $uri @rewrite;
        expires max;
        log_not_found off;
    }

    location ~* \.(js|css)$ {
        try_files $uri @rewrite;
        expires -1;
        log_not_found off;
    }
}