Although most shops in and around the city centre of Lal Chowk - the commercial hub of the summer capital here - were closed, establishments had opened for business in other districts of Kashmir, officials said.
Markets in Lal Chowk are yet to start functioning normally after the devastation wrought by the floods last month in the state with only a few shopkeepers having resumed business there.
Officials said that while public transport was sparse, private cars, cabs and auto-rickshaws plied normally. Educational institutions, government offices and banks are closed on account of the holiday for Diwali.
The prime minister arrived in the Valley today to celebrate the festival of lights with the flood-affected people. "Will be in Srinagar on Diwali, 23d October," PM tweeted.