Nearly two dozen terrorists are present in Srinagar and its periphery and even openly threatening shopkeepers in some areas, raising serious concern in the security establishment, according to officials.
However, security forces are taking all precautions to ensure that the terrorists do not use the situation to cause any flare-up as in the past incidents of stone pelting by youths have occurred during anti-insurgency operations, they said.
There have been only stray protests since the government imposed severe restrictions on communication channels and movement of people after it announced its decisions to abrogate the special status accorded to Jammu and Kashmir and split the state into two Union territories on August 5.
Restrictions have subsequently been eased, but the situation in Kashmir Valley seems "far from normal", particularly with a high presence of terrorists, they said.
At many places in Downtown Srinagar, the terrorists have been seen roaming freely and even warning shopkeepers to keep their shops shut and adhere to their diktats, the officials said.
Jammu and Kashmir Police chief Dilbag Singh did not rule out the possibility of presence of terrorists but said to claim that they are roaming freely "is an exaggeration".
From interactions with several officials of the state as well as the Centre, it is estimated that around two dozen terrorists are well-entrenched within the city limits, while their movement and visibility in rural areas have become a routine.
The officials, speaking on condition of anonymity, said counter-insurgency operations have taken a severe hit ever since August 5 when the government announced its decisions on Jammu and Kashmir.
Only two operations have taken place since August 5 -- one in Baramulla on August 20 and another chance encounter in Sopore on September 9.
The terrorists have erected blockades in certain parts of the city, including in areas adjoining Anchar Lake and Soura.
The officials said that the administration has ensured that there is no civilian death till now and apprehends that any strong action may provide a trigger for violent protests.
Search-and-cordon operations and imposition of night restrictions in the city area had ended in early 2000s and it had been declared as militancy free in 2012, they said.
The officials believe the terrorists have "a deeper game plan" as the violence level has come down despite their "heavy presence".
At many places in the city, including the highly secured Civil Lines areas of Raj Bagh, Jawhar Nagar and Lal Chowk, shopkeepers were threatened at gunpoint to keep their shops shut and ensure a complete hartal.
The shopkeepers and some media outlets have also been asked to keep their peripheral CCTV cameras off, the officials said.
In the insurgency-hit areas of Shopian, terrorists burnt down an automobile workshop as it was repairing vehicles on Saturday, they said.