The demonstrators in Dodipora village in India-administered Kashmir on Thursday accused security forces of cordoning off a playground and firing indiscriminately during a hunt for a militant suspect. Dodipora is about 90km north of Srinagar, the summer capital of Jammu-Kashmir state.
Four boys aged from six to 18 died in the shooting on Wednesday, but the army denied its soldiers fired indiscriminately.
Major-General N K Singh said the army cordoned off the area following a tip-off that some militants were there.
As soon as the army laid the cordon, the militants hurled grenades at the soldiers, setting off a gunfight, Singh said. The four boys died in the crossfire, he said.
But Ghulam Haffan Wani, whose eight-year-old son died in the shooting, said there was no gunfight and that only the soldiers were firing.
"Perhaps, they were trying to catch one of the boys suspecting him of having links to the militant groups," Wani said, adding that the firing started when one boy tried to run away.
Both the Indian army and the state government promised to investigate the incident.
India and neighbouring Pakistan control separate parts of Kashmir and have fought two wars over the divided region.
More than a dozen separatist groups are fighting security forces in Indian-administered Kashmir seeking independence or its merger with mostly Muslim Pakistan. The 16-year insurgency has claimed more than 66,000 lives, most of them civilians.