Most of the dead were selling vegetables and second-hand clothes, police officer Zubair Mehmood said. Three police officers nearby were injured and a child was among the dead, he said.
The United Baloch Army claimed responsibility for the blast.
The group is one of several who are fighting for independence for Balochistan, an arid and impoverished region with substantial gas, copper and gold reserves.
It constitutes just under half of Pakistan's territory and is home to about 8 million of the country's 180 million citizens.
Human rights groups say hundreds of bodies have been recovered in the region since 2011. Many have broken limbs, cigarette burns or other signs of torture. Local activists blame the security services.
The state denies the accusations and says that insurgents sometimes put on military uniforms before kidnapping people.
Sectarian attacks are also on the rise, and militant groups frequently bomb or gun down Shia passengers on buses traveling to neighboring Iran.
(Reporting by Katharine Houreld; editing by Jason Neely)