India’s technology hub of Hyderabad was on high alert last night as security forces hunted the Islamic militants whom they blame for a double bombing that killed 42 people in the city.

Police also disclosed that they had defused 19 more bombs hidden in plastic bags at bus stops, cinemas, road junctions and pedestrian bridges across the city.

The blasts on Saturday - one in a restaurant and another during a laser show at an outdoor auditorium - were the latest in a series of attacks on Indian cities since 2001.

If all the bombs had detonated, police believe they would have dwarfed even the worst of the recent attacks – the multiple train bombings in Bombay that killed 186 last year.

“They could have killed hundreds,” Balwinder Singh, Hyderabad’s police commissioner, told reporters. “We have launched a manhunt for those who committed this dastardly crime.”

Hyderabad is considered a high-pro-file target because it is a centre of India’s burgeoning information technology industry, and is now home to dozens of top Western companies and many foreign executives.

The attack appears to have been designed to provoke a fresh bout of violence between Hindus and Muslims in the city of 6.5 million people, which has one of India’s largest Muslim communities.

India’s population of 1.1 billion is 80 per cent Hindu and about 13 per cent Muslim, but Hyderabad - the 16th-century capital of the Muslim Qutb Shahi dynasty - is more than 40 per cent Muslim.

Extra police and paramilitary troops were drafted in yesterday to prevent retaliatory attacks in the city, which has a long history of communal violence dating back to Partition in 1947.

Saturday’s attacks appeared to have been timed to cause maximum impact because yesterday was an auspicious day in the Hindu calendar, with an estimated 10,000 weddings being held across Hyderabad alone.

Local officials said that the 42 dead and 50 injured were of various castes and creeds, reflecting the ethnic diversity of the city, which is capital of the southern state of Andhra Pradesh.

“The victims are from all sections of society - they included Hindus and Muslims,” Y. S. Rajshekhar Reddy, the state’s chief minister, told reporters.

“Available information points to the involvement of terrorist organisations based in Bangladesh and Pakistan.” He added that there might be a link to another bomb attack in Hyderabad, which killed 11 people - mostly Muslims - outside the city’s 17th-century Mecca mosque in May.

Sriprakash Jaiswal, India’s Minister of State for Home, said: “One terrorist group or the other, which is bent on destroying the unity of the country, is certainly involved.”

The officials did not identify the suspected group, or explained how they reached their conclusions so quickly. Indian media reports, quoting unidentified security officials, named the banned Bangladesh-based Harkatul Jihad al-Islami organisation.

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