Indian stock market has been severely affected by the global financial turbulence, says the World Bank.

"The turmoil in international financial markets... has affected the region primarily through a falloff in portfolio flows and weakness in equity markets. The latter has been most pronounced in India, particularly during the first quarter of 2008," the report said.

 The turbulence in international financial markets, which started in the second half of 2007 and has continued through the first months of 2008, affected south Asia mainly on the account of a decline in portfolio flows and weakness in equity market, the multilateral funding agency said in its report.

However, the Indian equity market was hit the most on account of weak equity market, the report on Global development Finance said.

According to SEBI data, FIIs were net sellers in the first quarter of 2008, having sold equity of Rs 11,318.50 crore.

The stock market saw a sharp decline with the benchmark index Sensex falling from 20,300 in January to 15,644 in March 2008.

The sell-off in the Indian stock market during the first quarter of 2008 stemmed from concerns over a possible recession in the US, the report added.