The strike has been effective in most Kashmiri cities
Mr Malik was detained on Tuesday after a Kashmiri girl and her companion were detained and around $100,000 was recovered from them.
Officials say the money was being smuggled from Nepal and was intended for Mr Malik, who denies this.
All three have been charged with violations of foreign exchange regulations and the Prevention of Terrorism Ordinance (Poto).
Life disrupted
The strike was called by an umbrella separatist group, the All Party Hurriyat Conference (APHC), which counts Mr Malik as one of its leaders.
The strike closed down schools, shops, banks and post offices in Srinagar, Kashmir's summer capital.
Most vehicles too have stayed off the roads.
Local residents told the French news agency AFP that the strike was being observed in other major towns like Pulwama, Shopian, Baramulla and Sopore.
Mr Malik's arrest is being given political interpretations by some.
Election politics
Just before being taken away Mr Malik said he was being arrested because he had refused to take part in the state legislative assembly elections scheduled later this year.
India's Prime Minister Atal Behari Vajpayee has recently urged all Kashmiris to take part in the polls saying these would be free and fair.
A former Home Minister, Mufti Mohammad Sayed, says Mr Malik was arrested to ensure separatist leaders did not participate in the elections.
There has been no response from the government in Srinagar, or Delhi, so far.
Mr Malik heads the JKLF, one of the longest-established separatist groups in Indian Kashmir.