Two militants are holed up inside a house on the outskirts of the city as security forces tightened the cordon in Ahmadnagar locality, police said.
Police have asked the militants to surrender, but the ultras have refused the offer so far. The militants allowed the wife of the house owner, Abdul Majid Rangrez, to leave the building but have detained him inside, police said. Operations are on to flush the militants out.
A senior police officer said the security forces have evacuated the civilians from nearby houses to avoid any collateral damage in case the militants do not surrender.
The police launched the operation on Sunday following reports of militants hiding in the house. A brief exchange of fire took place that evening, resulting in injuries to one cop.
As the mammoth general elections have kicked off in the country, militant attacks have increased in the valley in order to instill fear among the masses and show their repulsion against the establishment.