One civilian was killed and 32 people including four soldiers were wounded in a powerful blast in Pulwama district on Saturday.
Police said separatist guerrillas tossed a grenade at a passing vehicle of counter-insurgency Rashtriya Rifles (RR) in the busy main market at Shopian, 75 kms from Srinagar.
"The market was humming with activity when the grenade exploded. One bystander was killed on the spot while 32 people including four RR troopers were wounded," said a police officer.
Doctors at the local hospital referred six critically injured civilians to Srinagar for treatment, the officer said on telephone from Shopian.
The condition of three soldiers was also reported to be critical, according to the police.
Security forces and police immediately surrounded the market place and mounted searches.
No group had yet claimed responsibility for the explosion that led to panic and tension in the town.