Four terrorists, including two Pakistani nationals, were shot dead in a police encounter in Vatva locality of the city in the wee hours on Friday.
The incident took place when a team of police officials raided a house near Vinzol railway station before the break of dawn.
When asked to open the door of the house, the terrorists opened fire from inside and in the ensuing gun battle the four terrorists were killed, police said.
Five policemen were also injured in the cross firing, they said.
Police recovered four pistols, ammunition, equipment to make detonators and a plastic bag containing explosives, which had the words `Mission Kashmir' written on it.
The bodies of the terrorists were taken to the civil hospital in the city for post-mortem, police said.
Four weapons used by the terrorists and empty cartridges were lying scattered on the floor, they added.