I have a zip folder on my desktop. The folder contains an MS Excel file. Without unzipping the folder and extracting the Excel file, I opened the excel file from the zip folder directly. I worked on the file and kept saving it. Then after finishing the work, I closed the excel file again saving it at the time of closing.
But the problem is when I reopened the Excel file from the zip folder, the modifications and work I did have not been saved at all.
Please tell me some way that I can recover the modified Excel file. I had done some major modifications and it would take me one full day to do same modifications again. Please help.

Did you check your temp folder?
You can find out where the file would be saved if you open it again from within the zipped file, change a little and than click on "save as" (not on save as not to overwrite the previous file). You can then see in what folder excel suggests to save the file.

I tried the method you suggested.

1) I reopened the zip folder and the excel file
2) I made minor changes to the excel file
3) I pressed the Save As button & noted the Temp folder path (with random name Rar$DI40.531). I didn't actually saved the file to avoid overwriting.
4) I went to the above noted path and there was a file but it didn't show the original changes/work I had done and neither the minor changes I did that as per this method.

Please help. Its imp for me to recover the file.

Did you look in your temp directory for other Excel files? The random name might be different each time you open the file from inside the zip-archive.