A girl died and four people, including a policeman, were wounded when two grenades were fired into the crowd on Friday in Beeru area, west of the state capital Srinagar.
Police guarding the meeting returned fire.
Sayyid, who took power in 2002 promising a healing touch to the Kashmiri people, was in Beeru to inaugurate a government building.
The attack on Sayyid's meeting came as hundreds of demonstrators gathered near Srinagar's main mosque to protest against what they said were human rights violations by Indian security forces in the region.
Police fired tear gas shells to disperse the 1000-strong crowd angry about the killing of a 13-year-old boy by police firing on demonstrators on Thursday.
Separatist violence in Indian-administered Kashmir has been unabated, despite peace moves by India and Pakistan, who both claim the Himalayan region.