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I created a azure logic app with HTTP trigger,two nested request/response connectors and trying to test the error scenario. Disabled retry policy of all connectors as well as main trigger. But its retrying multiple times. What is the actual behavior of the retry policy when disabled?

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A retry policy is the most basic type of exception and error handling. If an initial request timed out or failed (any request that results in a 429 or 5xx response), this policy defines whether the action should retry. By default, all actions retry 4 additional times over 20-second intervals. So if the first request receives a 500 Internal Server Error response, the workflow engine pauses for 20 seconds, and attempts the request again. If after all retries, the response is still an exception or failure, the workflow continues and marks the action status as Failed.

More info here: Handle errors and exceptions in Azure Logic Apps

Taken from Workflow actions and triggers for Azure Logic Apps:

The retry interval is specified in the ISO 8601 format. This interval has a default and minimum value of 20 seconds, while the maximum value is one hour. The default and maximum retry count is four hours. If the retry policy definition is not specified, a fixed strategy is used with default retry count and interval values. To disable the retry policy, set its type to None.