The government has said that that operation has gone well but many Pakistanis fear the militants have simply escaped to neighbouring towns and cities like Dera Ghazi Khan, where they will continue to cause chaos.
Police believe Tuesday's blast was caused by a suicide car bomb.
An emergency was declared at all local hospitals.
"The whole market has collapsed," Raza Khan, a local resident, told the Associated Press news agency. "There is smoke and people running here and there."
Police chief Mubarak Ali said the blast had ripped through the market, which he said was the busiest shopping area in the town.
"Several shops were destroyed and a mosque was also badly damaged," he said.
Heavy machinery, including cranes and bulldozers, were being used to move large chunks of concrete from the scene of the blast, amid fears that people may be trapped underneath.
Town commissioner Hassan Iqbal later told the AFP news agency the rescue work was over and all debris had been removed.
"It was a terrorist activity, similar to those being carried out in other parts of the country," said Mr Iqbal.
He said body parts from the suspected bomber had been recovered from the scene.
District health officer Dr Pervez Haider Altaf told AFP that people were frantically searching for survivors.
"The hospital in the town has been crowded by people looking for their relatives," he said.
Dera Ghazi Khan deputy police inspector Gen Mubarak Ali Athar, visiting the site, said it may have been a suicide attack.
The house of a senior provincial government adviser, Zulfiqar Khosa, was damaged in the blast but he was not among the injured, officials said.
Our correspondent says Mr Khosa recently presided over a meeting of religious leaders that had declared suicide-bombing un-Islamic.
Mr Khosa's son, Dost Mohammad Khosa, told AP the bombing was "a direct attack on us" and that two of his cousins were injured.
RECENT MILITANT ATTACKS IN PAKISTAN
Dera Ghazi Khan, 15 December: At least 22 killed in bomb attack on market
Multan, 8 December: Intelligence agency office attacked - at least 12 killed
Peshawar: Many recent attacks - 28 October bombing killed about 120
Lahore: Targeted several times - market bombs killed 50 on 7 December
Rawalpindi: Several recent attacks, including one at a mosque on 4 December in which 35 died
Islamabad: Security tightened after series of attacks - 20 October bombing killed nine at International Islamic University
Charsadda, 10 November: Car bomb kills 34 and wounds 100
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