Hours after India fired a short-range missile capable of carrying a nuclear weapon, Pakistan announced it had tested a similar missile. Each was capable of reaching cities in the other's country.
Also, officials in Pakistan said troops along its border with India traded heavy artillery and mortar fire, killing one Pakistani civilian and wounding 14 others.
India successfully fired a Prithvi missile from its Chandipur testing range in eastern Orissa state. The missile has a range of 153 kilometers (95 miles). Baljit Singh Menon, a defense ministry spokesman, said the test was routine.
Pakistan tested one of its Abdali missiles, which can carry both nuclear and conventional warheads and has a range of less than 200 kilometers (132 miles). Aziz Ahmed Khan, the spokesman for the Pakistani Foreign Ministry, would not say where the missile test was conducted, or at what time.
"Pakistan has also test-fired a missile today, but we informed India about it," Khan said.
Tensions have increased since the massacre Monday in Indian-controlled Kashmir. The victims, which included two children and 11 women, were upper-caste Hindus known as Kashmiri Pandits. A group of armed men dragged them out of their homes in the village of Nadimarg and shot them at close range, police and witnesses said.
Police said they believed the gunmen were Islamic militants, who have been fighting for Kashmir's independence from India since 1989.
"The pattern, methodology and the nature of targets of these acts of terror are all too familiar and therefore the culpability of Pakistan is all too clear," said Navtej Sarna, a spokesman for India's foreign ministry.
New Delhi has long accused Pakistan of supporting the Islamic militants. Pakistan insists it does not provide funding or weapons.
The two countries came to the brink of war after similar attacks a year ago. Both sides rushed hundreds of thousands of troops to their border, raising fear of a nuclear exchange, before international mediation defused the conflict.
More than 61,000 people, mostly Kashmiri civilians, have been killed in the insurgency. The countries have fought three wars since they gained independence from Britain in 1947.
India's latest test was one of scores carried out by its Defense Research and Development Organization to perfect the capability of the missile to carry a nuclear warhead. They have conducted 16 trials of the army version of the Prithvi, which was first test-fired in February 1988.
Sarna took an indirect swipe at the United States and its war on terrorism, in which Pakistan is a key ally.
"The global war against terrorism can only be won when it is pursued without double standards and terrorism is eradicated wherever it exists," he said.
"The combat against international terrorism is ill served if threats in some cases are met with military means and in others with calls for restraint and dialogue."
Washington has repeatedly called on India and Pakistan to resume dialogue and was instrumental in getting the two to pull back from the brink of war last year.
"Pakistan is making sure that India gets the message that it is not going to be cowed down by the last confrontation and is prepared to match India test for test," said Kanti Bajpai, a professor of international affairs at Jawaharlal Nehru University in New Delhi.
"Both India and Pakistan had promised to solidify their nuclear deterrence after the nuclear tests in 1998. Pakistan wants to make clear it's not far behind with its missile capability," Bajpai said.
The two countries shocked the world with dual underground nuclear tests in 1998, each earning international sanctions for their actions. They continue to build their missile capability with routine test firings.
India blamed Pakistan last year of supporting a terrorist attack on its Parliament and others against Indian security forces in Kashmir. The accusations prompted the two sides to mass a million troops along their frontier.
Tensions eased after senior-level visits from Washington and London to both South Asian capitals.
When asked whether relations between India and Pakistan were slipping back to the critical level of last year, Sarna said: "Certainly, relationships can't be seen to be mending when the sponsorship of terrorism leads to gruesome murder of men, women and children."