Two terrorists of the Lashkar-e-Taiba (LeT) outfit were killed on Friday in an encounter in the Braobandana village of Pulwama district in South Kashmir.
Army spokesman Colonel Rajesh Kalia said that weapons and warlike stores have been recovered in the operation.
The encounter broke out in the morning when a joint team of Indian Army, CRPF and Special Operations Group (SOG) started a search in the village on the basis of credible information of the presence of terrorists.
Terrorists hiding in a house opened fire at the security forces.
Police said that both terrorists were wanted for killing of a policeman, a civilian and other terror activities.
The slain terrorists have been identified as Irfan Ahmad Degu alias Abu Zarar of Naina Litter Pulwama and Tasaduk Amin Shah of Kadlabal Pampore.
Both were affiliated with proscribed terror outfit LeT and were wanted by the law for their complicity in terror incidents including attack on security establishments and civilian atrocities.
Clashes broke out near the encounter spot as a large number of stonepelters assembled there and tried to disrupt the operation of security forces.
Security forces have launched a massive hunt for terrorists in the South Kashmir in view of the Amarnath pilgrimage that will begin 16 days later on 1 July.
There were reports that some Pakistani terrorists have taken shelter in areas close to the pilgrimage route.
Meanwhile, security forces are learnt to have arrested four newly recruited terrorists in the Baramulla district of North Kashmir.