A suspected militant and a civilian were killed as army opened retaliatory fire in self-defence on Wednesday at Watlab, six kilometres from Srinagar, a defence spokesman said.
The firing occured at the spot where people had gathered to protest against Tuesday's boat capsize incident, he said.
Army jawans opened fire after they were attacked by a militant from the crowd of over 500 people who had gathered at Watlab, the site of the drowning incident.
One jawan was injured in the firing by the ultra and in the retaliatory firing, one militant and a civilian were killed, he said adding, a pistol was recovered from the possession of the slain militant.
The spokesman said three leaders who were inciting the crowd were also taken into custody.
The killings have sparked fresh round of protests in the village and adjoining areas as the protestors alleged that army opened unprovoked fire on the unarmed people gathered at the site.
