Indian soldiers in Occupied Kashmir carried out a large-scale manhunt on Monday, a day after nine Hindu pilgrims were killed in one of the deadliest recent attacks on civilians.

Around an hour before Hindu-nationalist Prime Minister Narendra Modi was sworn in for a third term in the capital New Delhi on Sunday evening, gunmen in Held Kashmir ambushed the bus packed with Hindu pilgrims celebrating after visiting a popular shrine.

Indian media reported that the attackers fired on the bus, shooting 10 people and with at least one child among the dead. The bus then swerved off the mountain road into a ravine, with dozens injured.

Soldiers and police officers were searching the Reasi area in the south of the disputed territory.

Indian official Manoj Sinha said the joint "operation is in progress to neutralise the perpetrators" who carried out the attack, announcing $12,000 in compensation for each of the families of those killed.

Top government official Amit Shah -- interior minister in the previous government, and who took the oath of office shortly after Modi -- warned that the gunmen would "face the wrath of the law".

"The culprits of this dastardly attack will not be spared," Shah said on social media late Sunday.