Mix the milk and water and heat it on the stovetop, such that it is just warm to the touch. Ensure that the milk-water mixture is not hot, as heat will kill the yeast. Once warmed, take it off the heat and keep aside. (skip this step if using instant yeast)
To the warm milk-water mixture, add the sugar and mix to dissolve. Add the yeast and stir. Keep aside for 8-10 minutes, until the yeast is activated and the mixture is frothy.
If you have a stand mixer, then attach the dough hook. In the bowl of the stand mixer, add the bread flour, followed by the milk-water-yeast mixture.
In a small bowl, combine the oil and yogurt. Whisk together and add the mixture to the rest of the ingredients. Add salt.
On medium speed, mix together all the ingredients in the bowl of the stand mixer until it forms a dough. The dough should not be too dry, and will feel slightly sticky but will come together easily into a ball. Turn out the dough on the counter and knead it for 2-3 minutes. Shape it into a ball. If the dough is too dry, add a little more water to hydrate and knead.
Brush a teaspoon of oil into the inner pot of the Instant Pot. This will prevent the dough from sticking into the pot while it proofs. Now place the dough ball in the Instant Pot.
Set the Instant Pot to the ‘Yogurt’ setting (Normal mode) for 1 hour. Cover the Instant Pot with a glass lid of the lid of the Instant Pot with the vent in 'venting' position.
After one hour, the dough will double in size. Take it out, flatten the dough and cut it into 8 equal-sized pieces. Leave the pieces to proof for 10-15 minutes, covered with a towel to prevent them from drying out.
As the dough is proofing, pre-heat a cast-iron pan.
After 10-15 minutes, the dough portions would have risen slightly again. Take a piece of dough, roll out with a little flour, and place it on the preheated cast iron pan. Keep nigella seeds and melted butter or ghee handy. As the naan starts to cook, bubbles will appear. Sprinkle the nigella seeds and gently press them on the surface of the dough. Let the naan puff up and cook on one side before flipping it over and cooking the other side.
Once cooked, brush the naan with some melted butter or ghee and keep aside. Continue with the rest of the dough.