"The encounter at Ahmadnagar locality of Buchpora ended with the killing of both the terrorists holed up in a house," a police officer said.
He said bodies of both the terrorists were recovered along with a cache of arms and ammunition from the encounter spot.
A police spokesman identified the slain terrorists as Abu Huzaifa and Chota Hafiz.
The gunbattle started last evening when police, assisted by security forces, launched a search operation following specific information about presence of militants in the house in the locality.
A policeman was injured in the initial exchange of fire but the operation to neutralize the militants was suspended to ensure safety of civilians, including a couple in whose house the militants had got into, the officer said.
After a night-long lull, the encounter resumed this morning after the ultras let go the house owner Abdul Majid Rangrez and his wife, he said.
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