Statements on the incident, which sparked protests in Nadihal, a village on the shores of Wullar - Asia's largest fresh water lake in the north of Kashmir – have been conflicting.
The officials of the Indian army's counter-insurgency Rashtriya Rifles, which uses a portion of the school building as temporary barracks, said they suspected the student killed in the blast was carrying a bomb in his schoolbag.
"We suspect he had been asked by the terrorists to plant the bomb inside the school to target us," said military official Colonel Marya.
Local police said separatists fighting Indian rule over the disputed Himalayan state tossed a hand grenade into the building to target troops.
Indian police carry the body of a
man killed in a previous clash
"A 10th class student, Mohsin Sarwar Lone, died on the spot and seven of his classmates and a visitor were injured," Deputy Police Inspector-General Raja Aijaz Ali said.
Another police officer said a preliminary investigation had revealed that Lone died of a heart attack as the blast rocked the building.
"Eight others, including seven students, sustained splinter injuries and have been hospitalised," he said.
Al-Badr Mujahidin, one of several groups fighting Indian control, told local news agency CNS that a group of students had a few days previously clashed with soldiers who accused them of damaging an idol they had put in the school premises.
The residents, including students' parents, blamed the troops for the incident and demanded they should be removed from the school immediately.
In a separate incident, Indian troops shot dead four fighters and their local guide during as firefight at Magam Sonabrari, a remote village in the southern Anantnag district overnight, an official said on Friday.
They said fighting broke out when troops raided a rebel hideout. The soldiers had asked the fighters to lay down their arms and surrender but they ignored the call and opened fire.
Commanding Officer of 36 Rashtriya Rifles Sanjay Shah said his men raided the hideout on learning the district commander of Harkat al-Jihad-e-Islami, Manzur Ahmad Butt, along with four other fighters, were hiding in the area.
"They tried to flee from the hideout, but we eliminated Manzur and four of his accomplices," the officer said.
The Indian troops have, meanwhile, shot dead another fighter who, officials said, had tried to flee the security dragnet during a cordon-and-search operation at Kralagund, a hamlet close to the border that splits Kashmir into Indian and Pakistani-administered parts.
Work continues apace to clear
the road for the bus
The bloody clashes have preceded the rolling out of a bus service between Srinagar and Muzaffarabad, the two principal towns of divided Kashmir.
Meanwhile, crowds took to a vital highway connecting the Vale of Kashmir at Banihal, about 100km south of Srinagar, on Friday to protest against the alleged extra-judicial killing of a local trader.
Residents said 24-year-old Riyaz Ahmed Mir was called to an army camp in the area on Wednesday but a day later the soldiers left his bullet-riddled corpse in a neighbouring village.
The protesters chanted slogans against an army major accused of being responsible for the custodial killing.
"The officer had also detained the victim's younger brother and earlier killed another villager in a similar fashion"
Protester in Banihal
"The officer had also detained the victim's younger brother and earlier killed another villager in a similar fashion," they told local official Bashir Ahmad Khan who went to Banihal to get the protesters to leave the highway.
Police said they had registered a case against the accused and started investigations. However, a handout issued from police headquarters said the troops had busted a fighters' hideout at Guddar, near Banihal, and that during the searches exchanged fire.
"A civilian was caught in crossfire and died," it said.