District Judge Poonam A Bamba allowed the agency's plea for custody after it said that the accused was required to be confronted with evidence and needs to be taken to various places as part of the investigation.
The court refused to allow the NIA plea for two-week custody.
Mr Watali was arrested from New Delhi yesterday by the agency for alleged involvement in a terror funding case. Earlier, the agency had carried out raids in the premises of the businessman and of other suspects.
It had further said in a statement that on June 3, 2017, the NIA had searched Mr Watali's house in Srinagar and seized incriminating documents pertaining to financial transactions and land deals.
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