By Sanjoy Majumder BBC News Online correspondent in Delhi

The year in Indian-administered Kashmir ended much as it had begun - with tension over a major attack by separatist militants.

The recent attack on two Hindu temples in the Kashmiri winter capital Jammu has raised the stakes for the new state government, which is under pressure to stem the violence.

There is a new atmosphere in Kashmir, even though militant violence and alienation among the people remain Kashmiri journalist Shujaat Bukhari

The killings dampened the hopes of peace which rose after a landmark election in which the state's previously dominant political party, the National Conference, was defeated.

The reformist People's Democratic Party took power in an election largely acknowledged to be among the fairest in Kashmiri history.

Its leader, Mufti Mohammad Sayeed and his daughter Mehbooba, ran a radical campaign, pledging to crack down on human rights abuses and remove tough anti-terror laws.

But recent militant attacks mean the standoff between India and Pakistan over the disputed territory continues.

War clouds

In January, relations between India and Pakistan deteriorated after an attack on the Indian Parliament in December 2001.

It was blamed on Kashmiri militants who, India alleges, are armed and supported by Pakistan. The government in Islamabad denies this.

Indian security forces check bombed truck

It was one of several incidents this year that brought the two nuclear neighbours to the brink of a third war over Kashmir.

In May, more than 30 people, including women and children, died in an attack on an army camp near Jammu.

India responded by increasing the number of Indian soldiers deployed along the border with Pakistan.

India said this was to deal with what it described as increased infiltration of militants into Indian Kashmir from Pakistani-held territory.

It was a sudden escalation of tension in South Asia.

When Pakistan matched India's troop deployment, international pressure mounted on the two countries to back off.

Ray of hope

But it was the election in Indian-administered Kashmir that restored India's credibility and raised expectations of a way out of the violence.

The polls were held under the auspices of India's independent election commission amid the glare of publicity, keen international interest and threats of disruption from the separatists.

Mufti Sayeed - the new chief minister

It was a violent election - more than 800 people were killed including a Kashmir state government minister.

But the surprise result, in which the ruling National Conference was ousted, seemed to be widely welcomed, including by some of those who stayed away from the vote.

But some remained sceptical, saying the elections had more to do with local issues such as jobs and corruption, rather than the wider question of the future of Kashmir itself.

Looking ahead

The shift in the Kashmiri political landscape has forced many major figures to reconsider their previously held, and sometimes hardline, positions.

In a recent BBC interview, a leading separatist leader, Mirwaiz Umar Farooq, hinted at some flexibility in his approach to the future.

Kashmiris want peace without the shadow of the gun

He said there was a possibility that the state's leading separatist alliance could settle for something less than reunification with Pakistan-administered Kashmir.

For his part, chief minister Mufti Mohammad Sayeed has urged India to hold talks with all shades of Kashmiri opinion and with Pakistan.

Observers say a lot depends on Delhi's response to this and how much of a free hand they are willing to give the new leader.

According to local journalist Shujaat Bukhari: "There is a new atmosphere in Kashmir, even though militant violence and alienation among the people remain.

"It is time Delhi recognised the clear message from the elections that they [the Kashmiris] desire peace."