Step 1: The reagent set is \(HgSO$_4$ / dil.\;H$_2$SO$_4$\) in presence of water and heat.
This combination is used for oxymercuration–demercuration of terminal alkynes.
Step 2: Terminal alkyne attached to aromatic ring undergoes
\[
R–C\equiv CH \;\longrightarrow\; R–CO–CH$_3$
\]
via Markovnikov hydration.
Step 3: In the given molecule, the side chain
\( \text{C}\equiv\text{CH} \) is attached to benzene adjacent to a carbonyl group.
After hydration the triple bond converts into a methyl ketone ring closure.
Step 4: The resulting system behaves as if the alkyne portion forms a
six-membered saturated ring with \(C=O\) → cyclohexanone fused to benzene.
Step 5: Match with options → only (D) represents this transformation.