Four people including two paramilitary Border Security Force (BSF) troopers were wounded on Tuesday afternoon in a powerful explosion in the high security city centre, Lal Chowk, officials said.
A senior police officer said guerrillas tossed a hand grenade at a parked BSF vehicle in Lal Chowk this afternoon, wounding two troopers sitting in the vehicle and two civilian bystanders.
"The injured were taken to hospital for treatment," the police officer said.
The area near the clock tower in Lal Chowk was cordoned off by the police and paramilitary Central Reserve Police Force (CRPF) to conduct a search.
No group has yet claimed responsibility for the blast which came as the army, CRPF and police were busy searching a forest area near the south Kashmir saffron-rich Pampore town on Tuesday afternoon.
During the search, hiding militants opened fire at the surrounding troops, a police officer said.
"So far one militant has been killed and a trooper wounded in the continuing gunbattle," the officer added.