Saturday’s blast in Palu, capital of volatile Central Sulawesi province, comes amid warnings of violence during the Christmas and New Year season in Indonesia.
Pork is forbidden to Muslims, but eastern Indonesia has large pockets of Christians.
Bystanders carried shoppers covered in blood from the makeshift market to a road, putting them in passing cars to be taken to hospital.
One man screamed as he held up his bloodied arms.
One wounded pork seller said in an interview with El Shinta radio from his hospital bed: “Suddenly there was a flash of light and a really loud bang. We were all thrown to the ground.
“I saw many buyers who had lost their legs. We just tried to save ourselves by fleeing the market.”
“I saw many buyers who had lost their legs. We just tried to save ourselves by fleeing the market”
Rais Adam, Central Sulawesi police spokesman, said by telephone from Palu: “Total victims are 54. From that 54, seven died.”
Major-General Paulus Purwoko, the national police spokesman, said: “It was a homemade bomb. It was full of nails.”
The official Antara news agency said another bomb was found and defused near the market in Palu, 1650km northeast of Jakarta.
Central Sulawesi is a region plagued by religious violence and tension since the late 1990s. Fighting between Muslims and Christians from 1998 to 2001 killed 2000 people, mainly around the Muslim town of Poso.
The spokesman of Susilo Bambang Yudhoyono, the Indonesian president, said Susilo condemned the Palu blast and had ordered an investigation.
The explosion occurred not long after dawn when people were shopping. Slabs of pork were still sitting on wooden tables inside the small market, which local police said was only used ahead of special occasions.
Family members wailed outside a hospital where some of the wounded were being treated.
Susilo has condemned the blast
Antara reported that a device that looked like a bomb had also been found in a box outside the home of a legislator in Lampung province on Sumatra island in the country’s west. One family member said there was no detonator inside.
Police said another suspicious package was found in a town in North Sumatra province, but no explosives were inside.
While a peace accord halted the 1998-2001 bloodshed in Central Sulawesi, violence has erupted sporadically.
In one of the worst incidents, three teenage Christian girls were beheaded near Poso in October. Bomb attacks in May in the Central Sulawesi Christian town of Tentena killed 22 people.
Inter-communal violence has killed thousands in the world’s most populous Muslim nation since Suharto’s downfall in 1998.
Police have warned of militant attacks during the Christmas and New Year period.
Western countries have urged citizens to avoid travel to Indonesia because of fears foreigners could be shot on the streets or kidnapped.