Correct Option (C)
The passage explicitly states, "Cynthia was a shy girl. She believed that she was plain and untalented." This self-perception directly indicates a profound lack of self-confidence, which was the fundamental reason for her apprehension about performing on stage.
Incorrect Options:
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Option (A): The passage does not directly state that Cynthia feared her classmates would laugh at her. Her fear stems from her own perception of being "plain and untalented," indicating an internal lack of confidence rather than an external fear of mockery.
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Option (B): Her stomach churning is described as a physical symptom of her terror ("her stomach churning in terror"), not the underlying cause of her fear itself. It is a physiological response to her anxiety.
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Option (D): The passage provides no indication that Cynthia disliked school plays in general. Her fear was specifically related to her own participation and performance on stage, driven by her lack of self-confidence.