The blast ripped through a residential neighborhood outside the house of former federal minister Naseer Mengal's son Shafiq Mengal.
Many houses caught fire after the blast.
A senior police official, while talking to Geo News feared a sharp rise in the death toll.
Emergency was declared in the area in the wake of the blast, the bang of which was heard miles away. Such was the intensity of the explosion that most of the windowpanes in the nearby housing blocks and market place fell apart.
Ambulances are doing rounds between the hospitals and the blast site.
Firefighters also reached site of tragedy and were busy fighting flames.
Two of the injured are in critical condition, rescue sources told Geo News.
A shootout between unknown gunmen and police was also reported after the blast. Eyewitnesses say the armed men opened fire at police and media who arrived on the scene after the blast. Gunmen also manhandled a private TV channel's cameramen and broke his camera.
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