declare @test table
(
id int,
varval varchar(100),
x xml
)

insert @test
select 1,'abc',
'<z>
<a>
<b>1</b>
<c>2</c>
</a>
<a>
<b>4</b>
<c>5</c>
</a>
</z>' union all

select 2,'pqr',
'<z>
<a>
<b>21</b>
<c>22</c>
</a>
<a>
<b>14</b>
<c>52</c>
</a>
</z>'

UPDATE @test
SET x.modify('insert <new>{sql:column("varval")}</new>
              into /z[1]')
              
              SELECT * from @test
  

output
--------------------------------------------------------------------------------------
id	varval	x
--------------------------------------------------------------------------------------
1	abc	<z><a><b>1</b><c>2</c></a><a><b>4</b><c>5</c></a><new>abc</new></z>
2	pqr	<z><a><b>21</b><c>22</c></a><a><b>14</b><c>52</c></a><new>pqr</new></z>