"India's financial sector is likely to be less affected than similar sectors in most emerging economies by the turbulence in global financial markets," the head of the country's central bank said.
"However, local shares have recently borne the impact of changing sentiment," he said.
"The money, government securities and foreign exchange markets have been stable in India and, in our view, they may not be vulnerable in terms of direct and first-round effects," Reserve Bank of India (RBI) Governor Yaga Venugopal Reddy said in a speech delivered in New York on Tuesday.
The speech was posted on the central bank's website on Wednesday.
The 30-share BSE index has fallen about 20 per cent in 2008 as foreign funds sold local shares.
Foreign funds have sold about $185 million so far in April, bringing their net sales to more than $3 billion in 2008. In 2007, they bought a record $17.4 billion.
Reddy also said that domestic output and prices are under pressure due to high global prices of food, fuel and metals, and the turbulence in the financial markets.