The police said three militants were killed and all the hostages were rescued in Thor village of Ramban district where the militants had entered a house and took the inmates hostage. An army soldier was also killed during the gunfight.
All the three slain terrorists belonged to the Hizbul Mujahideen outfit and arms and ammunition were also recovered from their possession, the police said, adding that these terrorists were involved in reviving militancy in the Chenab Valley region of the state.
Besides, security forces engaged a group of militants in Naranag forest area of north Kashmir's Ganderbal district.
Reports from the area said two militants have been killed so far in this gunfight. But an official confirmation is still awaited.
"The encounter in Naranag forest area is still going on," a police source said.
This group of militants, according to sources, could have recently infiltrated into the Valley from across the Line of Control (LoC) in Gurez sector.
The Pakistan army has been violating the ceasefire in Gurez sector during the last three days and defence sources said the ceasefire violation is intended to facilitate the infiltration of terrorists into the state.
Meanwhile, militants hurled a grenade at the security forces in Nawa Kadal in the old city area of Srinagar.
The police said the grenade exploded without causing any damage.
( With inputs from IANS )