Five Indian soldiers have been died including two military captains in three-day long hold out of a training centre near Srinagar by four militants. The Indian forces have claimed to kill a gunman.
The stand-off began when four attackers ambushed a military convoy before taking refuge in a training institute.
The fighting raged again on Sunday morning as the soldiers repeatedly tried to dislodge the gunmen.
Large number of students and staff were evacuated from the building on Saturday as it was encircled by troops.
Indian forces said they are preparing for a final assault on the institute building.
The gunmen holed up in the government-run Entrepreneurship Development Institute after attacking paramilitary forces convoy on the main road linking Srinagar to Jammu.
Himalayan region of Kashmir, divided between India and Pakistan, claimed by the both countries in its entirety, has been a flashpoint as the two South Asian rivals have fought two wars over the region.