The operation was launched in Sonnar village near Mandral-Singhpora in Chatroo belt on Sunday, leading to a gunfight that left one paratrooper dead and seven other soldiers injured.
A fresh contact was established with the holed up terrorists in the dense forests of Singhpora this morning, the officials said.
They said heavy firing between the two sides was going on when last reports were received and efforts are on to neutralise the terrorists operating in the area.
A major terrorist hideout was unearthed near the scene of the encounter on Monday and several individuals were picked up for questioning, the officials said.
A group of two to three terrorists allegedly affiliated with the Pakistan-based Jaish-e-Mohammad (JeM) are believed to be trapped in the encounter, officials said.
