The best way to handle inference questions such as this one is to start by reading the question stem. This lets us know what task we have to accomplish with the stimulus text. We should not read the text until we know what our task is.

Once we have read and understood the task, most people will already have the hypothesis in mind that newborn caterpillars move towards light. That might lead you to answer choice (C), but let's say that it doesn't. We'll start from the top.

(A) Caterpillars have an innate tendency to move in the direction of gravity.

Does the text say that? No. Do we know that? No. In fact, usually caterpillars move up. Discard A.

(B) Newly hatched caterpillars are unable to see in the dark.

Does the text say that? No. Do we know that? No. In fact, there is no information at all in the text about whether caterpillars can see in the dark. Discard B.

(C) Newly hatched caterpillars move towards the strongest light source in the environment.

Does the text say that? Well, kind of. It does provide some evidence to suggest that. Let's keep C for now.

(D) Newly hatched caterpillars move toward the leaf bud nearest to them.

Does the text say that? No. In fact, the text says that caterpillars move upward searching for a bud to eat, even if there is a bud conveniently to the left or right. Eliminate D.

(E) The eyes of newly hatched caterpillars become less sensitive to light over time.

Does the text say that? No. Do we know that? No. Must that be true? No. We have no information about the eyes of caterpillars or how sensitive they are to light over time. Eliminate E.

Since only (C) is left, that must be the best answer.