Controversy has erupted over the Hyderpora encounter following conflicting claims about the two deceased as their family members contested the police's charge that they were "terror associates".
The Jammu and Kashmir police, in a statement, said that the deceased identified as, Mohammad Ibrahim Khan, sustained grave injuries succumbed during treatment.
The local NIA team has already been assisting the J&K Police in the killings probe and trying to identify the masterminds behind these killings.
Trains are the preferred route out of the Valley with many saying they will ensure their safety for the rest of the journey.
Kashmir civilian killings: At least 500 people detained in J&K amid sweeping crackdown on 'targetted' deaths
Assailants fatally shot three Hindus and a Sikh person in the region’s main city of Srinagar this week in a sudden rise in violence against civilians.
Kashmir civilian killings: NIA carries out searches in several places in J&K, arrest 2 'TRF 'operatives'
During the searches, many digital devices, including mobiles, pen drives, data storage devices and other incriminating materials were recovered, the spokesperson said.
At least seven people were killed by militants in Kashmir Valley in the last five days. Of those killed, four belonged to minority communities.
The deaths come as a new, perceived threat from the Islamic State group affiliate in Afghanistan has seen U.S. military planes do rapid, diving combat landings at the airport surrounded by Taliban.
The incident occurred in Kangpokpi district on Friday night after the paramilitary force shot dead a civilian.