Dear Student,
Saponification reaction mixture is basic in nature. Formation of soap that is saponification involves base (usually sodium hydroxide, NaOH) hydrolysis of triglycerides, which are esters of fatty acids, to form the sodium salt of a carboxylate. Hence reaction mixture is basic.
So, the student will observe that there is no change in the blue litmus paper but red litmus will turn blue.
Hence the answer is Option (C)
Regards.