The correct answer is B. was reading.
The simple past tense is used to talk about completed actions or events that happened in the past. The past continuous tense is used to talk about actions or events that were happening at a specific time in the past.
In this sentence, the light went out while Renu was reading. This means that the light went out at a specific time while Renu was in the middle of reading. Therefore, the past continuous tense is the correct tense to use.
The other options are incorrect because they do not accurately reflect the time frame of the action. Option A, were reading, is in the plural form, which would be used if Renu was reading with someone else. Option C, reading, is the simple present tense, which would be used to talk about an action that is happening now or that happens regularly. Option D, is reading, is the present continuous tense, which would be used to talk about an action that is happening right now.