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Effect of two different host polymer matrices: Polyvinyl pyrrolidone (PVP) and Poly(vinylcarbazole) (PVK) on third order nonlinear optical properties of Ag:CdSe hybrid polymer nanocomposites has been investigated and discussed. Higher nonlinear behaviour of the PVK based nanocomposites as compared to PVP based nanocomposites is attributed to large electron delocalization in PVK matrix due to the two additional benzene rings. Nanocomposites show self focussing behaviour with two photon absorption processes. Large nonlinearity of CdSe hybrid polymer nanocomposites is the collective outcome of dielectric & Quantum confinement and surface Plasmon-exciton interaction effects. Third order nonlinear refraction parameters of these nanocomposites have been found to be improved with metal doping upto specific doping concentration due to the increased electron density.