Security forces cordoned off the area and surrounded the building opposite the State Bank of India branch, a shopping complex, where they suspected two fidayeen were hiding. Troops fired at the building as shopkeepers, shoppers and passers by fled in panic.
The injured include two schoolgirls, Shazia and Ulfat, who were passing by when the militants hurled a grenade at a BSF picket outside the bank branch. Among the other injured was a fire department employee.
The injured were taken to the sub-district hospital at Sopore. Attending doctors referred the two seriously injured to Srinagar for specialised treatment.
Massive demonstrations were witnessed in the town soon after the grenade attack as angry residents took to streets and pelted stones at the local police station alleging that BSF personnel opened indiscriminate fire after the grenade attack by militants and roughed up innocent civilians, sources said.
The situation in the town was stated to be tense but under control, they said adding reinforcements have been rushed to the area to maintain law and order.
(With inputs from PTI)