Bhat's counsel had moved the bail application before the Budgam Chief Judicial Magistrate in the case relating to provocative activities, including hoisting of Pakistani flag, during a rally organised in Hyderpora area on April 15 to welcome separatist leader Syed Ali Shah Geelani in Srinagar.
The court heard the arguments from both sides and reserved the orders on the bail application till Saturday.
Bhat was arrested on April 16 "for his seditious activities" during the rally.
The separatist leaders have been booked under Sections 121-A (waging war against the country), 124 (Sedition), 120-B (Criminal Conspiracy), 147 (rioting) of Ranbir Penal Code (RPC) and other minor offences.