By Altaf Hussain
BBC News, Srinagar
All the dead and injured are civilians (Photos: Nissar Ahmad)
At least five people have been killed in an attack by suspected militants in Indian-controlled Kashmir, police say.
Police say it is not yet clear whether it was a bomb or a grenade attack in the summer capital, Srinagar, which killed the four children and a woman.
They said paramilitary troops were the target - but all the casualties were civilians. At least 21 were wounded.
Violence in Kashmir has reduced markedly since a 2003 ceasefire between India and Pakistan.
But in recent weeks, there have been several attacks in the region which underline how fragile the peace is.
The blast occurred outside a crowded bus station in the Batmaloo area of the summer capital, Srinagar, eyewitnesses told the BBC.
"Three buses were parked in front of my shop. When I heard the blast, I first thought it was a tyre burst. But then I realised it was an explosion and people were wounded," Bashir Ahmad, a car mechanic who works in front of the bus station, told the BBC.
Police say paramilitary troops could have been the target
Although police said paramilitary troops posted nearby had been targeted, Mr Ahmad said Hindu pilgrims going to the mountain cave shrine of Amarnath generally take the bus from Batmaloo and they could have been the intended victims.
"We were in a group of 14 and have just returned from Amarnath. I was buying tickets to travel to Jammu to visit another shrine there when the blast took place," said Amar Singh, a Hindu pilgrim from the central Indian state of Madhya Pradesh.
Twelve members of his group have been admitted to hospital with injuries.
The children killed were aged between four and 12.
After months of relative peace, the Kashmir Valley has seen a number of attacks in recent weeks.
Late on Wednesday, a former militant and three members of his family were killed by militants in Doda district, police say.
On Monday, four people, including two civilians, were killed in two separate attacks in the disputed region.
The violence comes days after senior officials from India and Pakistan held talks to step up confidence-building measures in divided Kashmir.
The two countries both claim the Himalayan territory in its entirety and have fought two wars over it.