Besides three AK rifles, a huge quantity of ammunition, including five magazines each, and a medical kit were recovered from the militants, the police said, adding that the search was continuing.
Police also said a militant was killed in the encounter.
The official said the militants fired on a search team of security forces, who retaliated, triggering the gunfight.
Internet on mobile phones also remained suspended for a second day, a common practice by Indian authorities to make organising protests more hard.
The operation sparked protests near the encounter site and later spread to other parts of Srinagar, fuelling tension. "Ahmad succumbed to critical bullet injuries".
SP Pani, inspector general of police, Kashmir zone, said they have taken action.More news: DHS Ends Temporary Protected Status For 50000 Hondurans
The CRPF was quick to issue a statement saying the youth was not hit by the CRPF vehicle.
"Taking strong note of the death of a youth at Noorbagh by a police vehicle, the Chief Minister has directed the police to take legal cognizance of the incident and punish the guilty found involved in the incident", said an official spokesman.
A video of his death, which has been widely circulated online, shows Yadoo among the stone-throwing protesters being "run over by a mobile-bunker vehicle" at Noorbagh. "Is there no sense of humanity left in India?" separatist Mirwaiz Umar Farooq tweeted. Security forces also burst teargas shells to disperse the demonstrators at several places in the downtown and civil lines. Malik has been lodged in City's Kothibagh police station after the police picked him up from his residence at nearby Maisuma.
The authorities foiled attempt of the JRL leaders to address a Press conference at a local hotel.
The militant has not been identified yet. Adil was rushed to hospital where he was declared brought dead. Later, the two were shot dead. In north Kashmir, militants barged into the houses of Ghulam Hassan Dar, 45, and Bashir Ahmad Dar, 26, and shot them at Gulshan Mohalla in Bandipora on Friday night.
Police sources told Times Now that terrorists reportedly barged into the homes of the two civilians and abducted them.