The 27-year-old Saina, a former world number one, got the better of Sindhu, the Olympic and World Championship silver medallist, 21-17 27-25 in a pulsating summit clash that lasted 54 minutes.
"I am surprised with the way I played today. I moved well and picked Sindhu's difficult shots," an elated Saina said after the win.
Second seed H S Prannoy, who achieved a career-best World No. 11 ranking last week, saw off top seed World No 2 Kidambi Srikanth 21-15 16-21 21-7 in a 49-minute battle to win the men's singles title in the 82nd edition of the tournament.
Second seeds Manu Attri and B Sumeeth Reddy bounced back from a game and three-match point down in the second game to beat top seeds Satwik and Chirag Shetty 15-21 22-20 25-23 and win the men's doubles title.
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The excitement reached a crescendo when Saina and Sindhu made it to the finals here. The whole stadium reverberated with cheers of 'Saina Sindhu 'India' as both the players engaged in some exciting rallies at the Divisional Sports Complex.
Saina moved to a 17-12 lead after the interval before Sindhu reeled off four points to keep breathing down her opponents neck. However, unforced errors came back to haunt Sindhu as she hit out thrice and also found the net once to allow Saina pocket the opening game.
The second game went down to the wire with both the shuttlers battling it out till the last point.
The 22-year-old lanky shuttler extended her lead to 14-10 and maintained that till 18-14. Sindhu, however, committed series of unforced errors to allow the London Games bronze medallist draw parity at 18-18.
With Sindhu's smash going out, Saina held a slender lead. Sindhu again went wide with a backhand lift to hand over one match point to Saina.
However, Sindhu saved a match point and some excruciating long rallies ensued, which had the packed crowd on their toes.
The final between Srikanth and Prannoy also turned out to be an exhilarating one as the duo displayed their repertoire of strokes and athleticism during their fast-paced rallies.
Srikanth and Prannoy had played four times in their international career but it was the former who had the last laugh in the last three occasions. The only time Prannoy had beaten Srikanth was way back at the 2011 Tata Open.
Srikanth has been in the form of his life as he clinched four titles after reaching five finals this season but the statistics didn't matter on this day as Prannoy snapped his opponent's 13-match winning streak.
Ashwini and Satwik, who decided to pair up just six months back, showed their prowess by beating top seed and World No 16 Pranaav Jerry Chopra and N Sikki Reddy 21-9 20-22 21-17 to clinch the mixed doubles crown.
Later, Ashwini combined with Sikki to dump Sanyogita Ghorpade and Prajakta Sawant 21-14 21-14 to notch up the women's doubles title.