Police said the bomb had been planted in a red charade car and was detonated by a remote device in Mahmoodabad area near a bakery.
"They were a lot of people around the bakery at the time of the blast most of them involved in the electioneering campaign of a political party," a police official said.
A doctor at Jinnah hospital where the injured were taken for treatment said there were 12 injured people including two women and six children.
The blast spread fear among local residents and was so loud that it was heard from far away.
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Nearby shops and vehicles were also damaged in the incident.
Karachi has been hit by a series of bomb blasts recently most of them targeting election offices of the Mutthaida-e-Qaumi Movement and Awami National Party two parties contesting the General Elections on May 11.
The outlawed Tehreek-e-Taliban have threatened to carry out attacks against these parties and the Pakistan People's Party because of their secular policies.
The rally was led by Rana Mashood, former speaker of the Punjab assembly.
Television channels reported that Mashood had escaped unhurt in the attack when some unknown miscreants opened fire on the small election rally.