Deepawali is one of the oldest rituals for Kashmiri Pundits. That can be find a mention of its celebrations in Nilmat Puran. It was then celebrated as Sukhsuptika which literally means sleep with happiness. The celebration would start from Ekadeshi and last on Amavasya. On Amavasya elders of family would keep a fast and worship goddess Laxmi after sunset. Earthen lamps were placed in temples, on the road crossings, cremation grounds, banks of rivers, streams and lakes hills houses, at the foot of trees, cow sheds, court yards and shops. People would wear new clothes and listen to music.
With the passage of time some of these things have become obsolete but the tradition is still there. Since we were not used to eating Sweets in Kashmir, we substituted sweets with sweet puris and offered the same to Lord Narayan (incarnation of Lord Vishnu). On the whole we do not celebrate Diwili with the same gusto as is done by our Hindu brethren outside Kashmir. This could be due to the fact that we are Lord Shiva worshipers. Diwali is primarily a worship of Lord Vishnu who is very popular in the plains of India.
On Kartika Amavasya all except the sick and the children keep fast in Kashmir. In the evening Laxmi, the Goddess of Wealth is worshiped. Lamps are placed in temples, on crossings of roads, cremation grounds, banks of rivers, streams and lakes, hills, houses, at the foot of trees, cow-sheds, courtyards and shops. Shops are decorated tastefully. Feast is arranged in the evening in which friends relatives, Brahmins and servants participate. On the next day people with new clothes on, gamble and listen to vocal and instrumental music.