An exchange of fire was reported on the outskirts of Hyderabad on Monday, with initial reactions terming it a terror attack. Two suspects were shot dead during the encounter in the Millennium Township area of Shadnagar, around 60 km from the state capital. One of them was identified as Nayeem, a "most wanted" thug in both Andhra Pradesh and Telangana, ANI reported.

Joint operations are being conducted by the National Investigative Agency and the Telangana Police. The area has been evacuated, according to India Today. A house, possibly belonging to a local gangster, has been surrounded in Millennium Township.

Nayeem was a Naxal leader and wanted in nearly 20 murder cases, according to a Deccan Chronicle report. He is also suspected to have given the Gujarat Police information in the Sohrabuddin encounter case. Sohrabuddin Sheikh was a petty criminal in the state who was allegedly gunned down in a fake encounter in 2005.

Minister of State for Home Affairs Kiren Rijiju said it was a "serious matter" that security forces were in a gunfight with the militants, refusing to comment further and add to speculation.