There are 2 projects configure in Jira. When one of project's user add users in watcherlist then watcher list show both the projects users list. Is there any way to stop showing all the users in watcher list and should only single project users list? Please suggest.
Referring to your issue, there is already an improvement request being raised : https://jira.atlassian.com/browse/JRA-7659
Please feel free to vote on it to increase its popularity and add yourself as watcher in order to receive any latest updates from the developer and feedback from other user that is facing the same issue.
I don't think that's a good idea for most users. A lot of Jira sites use watchers explicitly to include people from outside the project because their input is needed.
I do understand the scenario for wanting it, I just thing you're never going to get it off-the-shelf because it's not useful to most sites. So I think you might as well get stuck into thinking about workarounds straight away.
My first thought would be to create your own "watchers" type field and disable the internal one. Install https://marketplace.atlassian.com/plugins/com.keplerrominfo.jira.plugins.usergrouppicker (which kind of fixes JRA-7659 already), create a "our watchers" field and then use that field in notification schemes. You'll lose the functions the system watchers provide (auto watch - note that that goes outside the project as well, and the field location), but it should do the trick.
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