I just need to know if i can use a separate 5v power supply to power a large number of Soil moisture sensors LM393 chip if i am using a 4051 multiplexer for collecting the signal as each chip has 2 LEDs and needs time to stabilize if constantly being switched ?
You can use a separate supply, but you need to connect the ground GND of the separate supply to the ground of the Arduino.
If you are using analog sensors, whose outputs are dependent on the supply voltage, you either need to run all the sensors from the same supply, or make sure that the regulated voltage they receive is the same for all sensors.
Otherwise you will receive different voltages from sensors which should be reading the same value