The 61-year-old Sharma arrived from Jammu and met around 12 delegations which comprised youths and students from the area, an official said.
An all-girls delegation also met Sharma and urged him to improve the education sector and create avenues for employment in the state.
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He said Sharma was likely to visit Anantnag district in South Kashmir tomorrow.
The delegations also highlighted that the national media, especially electronic media, was portraying Kashmir in bad light and urged him to ensure immediate end to this biased coverage.
Some of the groups also claimed excesses by the security forces.
Earlier, the Centre's special envoy on Kashmir, visited Kashmiri Pandit camps in Jammu. He visited Jagti area, the largest township of the displaced Kashmiri Pandits and met people to understand their problems.
Sharma, a former Intelligence Bureau chief, was appointed as the Centre's interlocutor on October 23 to hold talks with all stakeholders in an effort to find lasting peace in parts of Kashmir.
Around 60,000 Kashmiri Pandit families migrated in 1990 after the onset of militancy. Of these, 39,000 families based themselves in various camps in Jammu.
Sharma's interactions with youths and students in Pulwama is considered as a high point of his visit to the Valley.
Pulwama along with Anantnag was the epicentre of unrest following the encounter killing of Hizbul Mujahideen's poster boy Burhan Wani on July 8 last year.
Pulwama also earned the notorious distinction of being the nerve centre of militancy with anti-insurgency operations being launched on a war footing in the area.
After his first visit to Kashmir Valley, Sharma suggested that cases against 4,500 youths involved in stone pelting for the first time be dropped in a bid to win hearts.
Over 11,500 cases against stone pelters have been registered since July last year following Wani's death. Of these, over 4,500 youths were first-time stone pelters.
In a bid to resolve the Valley's electricity crisis, especially during winters, Sharma also took the initiative of providing additional 300 MW to Kashmir this year.
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