The correct option is C looking for
The option that is relevant in meaning to the sentence as well as the conversation, is the correct option.
Option B: 'Looking for' is the most suitable option, it means that the person, Amit, is in search of a shop that sells inexpensive sweaters. The person asks Babita if she knows any such shops.
Hence option B is the correct answer.
Option A: 'Thinking by' does not complete the meaning of the sentence. It means that the person is thinking next to the shop selling sweaters. This meaning is ambiguous. ('Thinking of what?' is the question that arises.)
Option C: 'Going in' completes the sentence. But, it does not sound relevant to the sentence that follows: "Do you know of any?" This means that the option does not relate to the conversation.
Option D: Similarly, 'walking to' also does not relate to the next sentence: "Do you know...?"
Hence options A, C and D are incorrect.