The protesters carrying placards and posters raised slogans against terrorism and the alleged apathy of the government towards the community.
Balidan Divas is observed by the Kashmiri Pandits since 1990 to commemorate the martyrdom of Pandit Tikalal Taploo and is a reminder of the exodus of the community from the Kashmir Valley.
The demonstration was attended by various Kashmiri Pandit leaders, including President Panun Kashmir Ashwani Kumar Chrungoo, Spokesperson Virender Raina and Convener Youth wing Sameer Bhat.
"Those who forget the facts of history are condemned to live it again and that is why that the leadership of the community has to remain on guard against any hasty and apolitical move regarding the settlement of the community in Kashmir," President Ashwani Kumar Chrungoo said.
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"The Kashmiri Pandit community was made the selected victim of terror and terrorism, murder and mayhem on a large scale resulting in their mass exodus from the valley in 1989-90," he added.
Alleging that there is a "campaign" against the community by separatists, Chrungoo expressed apprehension that attempts were being made to turn Kashmir into an "Islamic state".
"The displaced community would only return to its homeland in Kashmir at a time of its choosing and when its geo-political aspirations as per Margdarshan resolution are fulfilled through political and constitutional means," he said.