How to set default value of a select dynamically from database using smarty?

Since you specifically asked about Smarty templating, this is actually pretty easy. Use the html_options template from their example file and pass an identifier to the selected attribute.

Contents of index.tpl:

{html_options name=fruits options=$myOptions selected=$mySelect}

The only real messy part is getting the array populated from the database. Since you didn't specify that platform, I used MySQL.

First I set up a simple database table to model your example with a boolean column for selected state. This can be constrained or set however you like, but note for this example if multiple are set to true, then it will use the last one selected. And I used ID's as a bonus because it will probably be more useful for a non-trivial scenario. If you still want to use the same value as the option text, then just find and replace $row['id'] with $row['fruit']

DROP TABLE IF EXISTS fruits;

CREATE TABLE fruits (
  id INT PRIMARY KEY AUTO_INCREMENT,
  fruit VARCHAR(30),
  selected BOOLEAN
);

INSERT INTO fruits (fruit,selected)
VALUES
  ('Apples',FALSE),
  ('Bananas',TRUE),
  ('Oranges',FALSE);

Now use php to retrieve the data, create the smarty object, set values, and finally display.

<?php
require_once(__DIR__.'/vendor/smarty/smarty/libs/Smarty.class.php');

$database_server = "localhost";
$database_username = "username";
$database_password = "p@55W0rd";
$database_name = "example_database";

// connect to database
$mysqli = new mysqli($database_server, $database_username, $database_password, $database_name);
if ($mysqli->connect_error)
  trigger_error('Connect Error: '.$mysqli->connect_error, E_USER_ERROR);

// get records
$sql = "SELECT id, fruit, selected FROM fruits";
$result = $mysqli->query($sql);
while ($row = $result->fetch_array(MYSQLI_ASSOC)){

  // set array index of fruit as id
  $fruits[$row['id']] = $row['fruit'];

  // get id of selected fruit
  if ($row['selected'] == true)
    $selected = $row['id'];

}


// create object
$smarty = new Smarty;

$smarty->assign('myOptions', $fruits);
$smarty->assign('mySelect', $selected);

// display it
$smarty->display('index.tpl');

And this results in the following output:

<select name="fruits">
<option value="1">Apples</option>
<option value="2" selected="selected">Bananas</option>
<option value="3">Oranges</option>
</select>

Assuming the Select is hard coded you could use:

<select class="fruitsSelect" name="fruits">
   <option value="Apples" <?php if ($fruit == "Apples") {echo "Selected" }?> >Apples</option>
   <option value="Bananas" <?php if ($fruit == "Bananas") {echo "Selected" }?> >Bananas</option>
   <option value="Oranges" <?php if ($fruit == "Oranges") {echo "Selected" }?>>Oranges</option>
</select>

Note: My Php is a little rusty so forgive any syntax or stupid errors.

If the Select list is Dynamically generated, I suggest looking at what Fred-ii- suggested in comments.