At least 34 Indian soldiers were wounded in Kashmir when militants detonated a bomb in a shop as the bus carrying the troops passed by.
Police said the blast ripped through the bus on a highway in the Lawaypora area, on the outskirts of Srinagar, the summer capital of Jammu and Kashmir.
The bus, a private vehicle hired by the army, had a huge hole on its right side and dozens of smaller splinter holes.
A police spokesman said some of the wounded soldiers were in critical condition and being treated at an army hospital.
The blast also damaged half-a-dozen cars and mini-trucks parked nearby and shattered windows and shutters of several houses and shops. A teenage girl was also wounded in the explosion, which occurred in an empty vegetable shop.
The attack came a day after authorities said separatist violence had fallen since India and Pakistan began a ceasefire last month along a military control line that divides the Himalayan region between the nuclear-armed rivals.
The Hizb-ul-Mujahideen, one of Kashmir's guerrilla groups, called newspaper offices in Srinagar and claimed responsibility for the attack.
Elsewhere, eight militants and three soldiers were killed in separate gunbattles across the state on Tuesday, police said.
Islamic rebels fighting Indian rule in the Muslim-majority state since 1989 have said they would not observe the truce, aimed at building on warming relations between the neighbours, which went to the brink of war over Kashmir last year.
The truce on the 460 mile Line of Control has held and Indian Prime Minister Atal Behari Vajpayee is due to make a rare trip to Islamabad next week for a summit of South Asian nations.
But bilateral talks are likely to be some way off. India insists Pakistan end support to Kashmiri rebel groups.
Pakistan denies it foments violence in Kashmir and has repeatedly called for peace talks to resolve the dispute. More than 40,000 people have been killed in the revolt so far.