Three terrorists were killed in an encounter that began on Wednesday night in Arwani area of Anantnag district of Kashmir. Firing between security forces and militants went on till Thursday afternoon.
Combing operations are being carried out in the area currently.
Earlier, railway authorities suspended train services from Budgam-Banihal due to the encounter leaving hundreds of passengers stranded.
A search operation was initially launched in Hassanpora village in Bijbehara area of Anantnag on Wednesday after the authorities found specific intelligence inputs about militants in the village, a police official said. Militants fired at the military during the search operation.
Mobile phone services were temporarily suspended in the area on Thursday after encounter between the militants and security forces restarted on Thursday morning.
"Only landline phones are functioning in some parts of Anantnag district," said locals.
The encounter had started last evening and was later suspended.
Meanwhile, a bank was looted by terrorists in Arihal area of Pulwama district. Four gunmen looted eight to 10 lakh from Jammu and Kashmir Bank on Thursday.
