"We have issued this alert as we expect a retaliatory strike. Intelligence inputs suggest that the Indian Mujahideen will try to hit back after the arrest of Yasin Bhatkal. There are quite a few IM operatives out there who are capable of carrying out a strike," an IB official told Rediff.com.

All state police forces have been instructed to stay alert, check the movements of IM cadres and monitor sleeper cells which could be activated after Yasin's arrest.

Meanwhile, the IB is keeping a close watch on telephone calls and email communications that transpired between suspicious elements in India, Pakistan and the Gulf.