I accidentally fell a water droplet on my mobile phone's screen. But on observing closely I saw that the water droplets showed rainbow colors (the screen was mostly white). By rainbow colors I mean that; on slowly shifting my sight I could see the colors changing and were from the white light spectrum. Can somebody explain this phenomenon?
Yes. Underneath the droplet there is a set of tiny pixels, each of which produces one of the red/green/blue primary colors. Those pixels are so small that when all three are on, the result appears to your eye as a white spot on the screen.
But the water droplet acts like a combination of a magnifying lens and a prism, which makes the pixels appear larger and bends their color output into separate beams. Then, when you tilt the display at different angles, you see magnified images of the different color components.