The correct option is C Atmospheric refraction
The atmosphere of the earth is not uniform but consists of many layers of different densities. As the light enters the uppermost layer of the atmosphere from the star, it bends towards the normal as it enters the next layer. So the apparent position of star is different from the actual position. Also, the different layers are mobile and the density of layers change continuously due to which apparent position of star changes continuously and hence it appears as twinkling.