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The gunfight started after a joint team of police and security forces received an input about the presence of terrorists in that area.
The encounter broke out in the early hours of Tuesday after security forces launched an anti-militancy operation following information about the presence of ultras in the district's Alshipora area.
Three Jaish-e-Mohammad militants were killed in the Drach area of Shopian, while a Lashkar-e-Taiba militant was killed in the Moolu area of the south Kashmir district.
The encounter broke out between the militants and security forces at Kanjiular in Shopian after the personnel launched a cordon and search operation in the area.
Officials said that the terrorists fired upon the forces which led to an encounter.
The identity and group affiliation of the slain ultras was being ascertained.
While two Lashkar-e-Taiba (LeT) militants were killed in Shopian district, two Ansar Gazwat-ul-Hind ultras were killed in Pulwama district.
The security forces had launched a cordon and search operation in Tulran, Imamsahab area of Shopian, in South Kashmir on Monday evening, after receiving specific inputs about the presence of militants in the area.
Wagay was on bonafide military duty in Balapur, Shopian, on August 2, 2020, when he went missing.
The NIA said the preliminary investigation has revealed that he was involved in the conspiracy to carry out terrorist activities in collusion with other arrested accused.