Step 1: Nitric oxide in the gut is released by enteric inhibitory neurons. These belong to the non-adrenergic, non-cholinergic (NANC) nerves of the enteric nervous system.
Step 2: NO diffuses into smooth muscle cells and activates the enzyme guanylyl cyclase. This raises intracellular cyclic GMP, which lowers cytosolic calcium and causes the muscle to relax.
Step 3: In the gut this relaxation is essential for normal motility. It mediates receptive relaxation of the stomach, descending relaxation ahead of a peristaltic wave, and relaxation of sphincters such as the lower oesophageal sphincter and internal anal sphincter.
Step 4: Although NO is a vasodilator in blood vessels, the question asks about its primary gastrointestinal action, which is relaxation of GI smooth muscle. So vasodilatation (A) is a vascular effect, not the principal gut role here. Vasoconstriction (B) and slow contraction (D) are the opposite of what NO does.
Conclusion: The primary GI action of NO is gastrointestinal smooth muscle relaxation. Answer is option C.