Atleast seven persons were injured after suspected militants lobbed a grenade at Hari Singh High Street Market Lalchowk area of Srinagar on Saturday afternoon.
The attack comes despite tight security in Jammu and Kashmir since the centre revoked Article 370 on August 5.
An official said that the injured were immediately evacuated to hospital for treatment.
He said that the explosion created panic in the city.
The Kashmir Zone Police tweeted that the area has been cordoned off and a search is in progress. Jammu and Kashmir police and the CRPF are conducting a search to nab the attackers.