New Delhi - A 13-year-old boy was killed and 17 people were injured when a bomb exploded in a market in New Delhi on Saturday, a fortnight after the Indian capital was rocked by synchronized bombings.

The explosion occurred in the flower market in the southern Mehrauli area at 2:15 pm (0845 GMT) after two men riding a motorcycle dropped a plastic bag containing the explosives.

Police said the victim, 13-year-old Santosh Kumar, was killed when he picked up the bag.

"Witnesses told us that a boy picked up the bag asking them why they were leaving it there. Moments later there was an explosion that killed the boy on the spot," senior police official HPS Dhaliwal said.

Doctors at the All India Institute of Medical Sciences (AIIMS), where the injured were moved, said seven were critically wounded.

"Three of them have already been operated on. There are six women and children among the injured," Sanjeev Goel, a doctor at AIIMS, told reporters.

Meanwhile, though police were yet to confirm it was a terrorist attack, Delhi's Health Minister Yoganand Shastri told the NDTV news channel that it was "clearly a terrorist strike."

Police said preliminary investigations had shown that it was a crude, low-intensity bomb and ammonium nitrate was used with nails which acted as shrapnel. The blast created chaos in the market, which was full of Saturday shoppers. A local recounted the gory scene.

"It was a terrifying scene. I saw the boy's head getting ripped apart from the torso in the explosion," a shopkeeper told local news channels. "Another child standing next to that boy was seriously injured," he added.

The impact of the blast created a crater in the road and shattered window panes of nearby shops.

Roads splattered with blood, broken glass and shattered furniture were all that remained after the blast rocked the market place. Police cordoned off the area, and investigators rushed to the spot to take stock of the situation.

Local agencies and police were placed on high alert in the capital as some markets and commercial areas were cordoned off and additional police deployed at sensitive areas.

The incident occurred exactly two weeks after the city was rocked by a series of five blasts in markets that killed 24 people and injured at least 100.

At least 55 people were killed in multiple bomb blasts in the western city of Ahmedabad in July.

Police say they have arrested the head of a group claiming responsibility for the attacks.

Mohammed Arif Sheikh, described as the founder of the Indian Mujahideen (IM), was arrested along with four others, Mumbai police said on Thursday.

No militant outfit owned up to Saturday's attack in Delhi so far. The police said they were conducting searches to track down the bombers who were believed to be in their mid-twenties.

External Affairs Minister Pranab Mukherjee told reporters in Delhi that there would be "zero tolerance" for terrorism and vowed that the government would take strict action against the culprits.

"We will take strong measures to put an end to these acts of terrorism ... The government is determined to bring the culprits to book," he said.