Here are the latest developments in investigation:
The police have located one person with the help of the CCTV footage, say sources. The man came in at the blast site in a bicycle with a bag hanging in front which the police believe was carrying the IED. He went back, not on bicycle but on foot.
In a bid to gather more evidence, the NIA is conducting raids at Azamgarh in UP, Darbhanga in Bihar and Nanded and Beed in Maharashtra.
Sources say the NIA have also made enquiries at Chanchalguda and Cherlapally jails in Andhra Pradesh where alleged past IM operatives are lodged.
Sources say the Home Ministry is concerned about the renewed Indian Mujahideen activity. Bomb squad and forensic sources have told NDTV that the blast show IM signatures - the use of ammonium nitrate and other powerful explosives like the Tri-Nitro Toluene (TNT).
The Hyderabad Police have spoken to Abdul Wasey Mirza, the 23-year-old who was present at the blast site and was injured by the shrapnel. He had been wounded in two terror attacks in Hyderabad. (A survivor's request: please don't do it again) In 2007, when he was 18, he was hurt in a blast at Hyderabad's Mecca Masjid, which killed 17 people.
The government has faced scathing attack from the Opposition over the Hyderabad blasts who said intelligence warnings, issued on Tuesday, were largely ignored by the Centre. Home Minister Sushil Kumar Shinde refuted the opposition's accusations and said in Parliament that Union government had taken "necessary steps" but said he could not elaborate for security reasons. (Read: Centre took necessary steps, says Shinde)
In Hyderabad, Mr Shinde said yesterday that the intelligence input was not specific. In Parliament, BJP leaders asked sarcastically if the government would like intelligence alerts to include "door numbers and street numbers." (Read: Pune link to Hyderabad blasts)
The BJP also pointed out that in October, the Delhi Police said that alleged Indian Mujahideen terrorists had disclosed that they had surveyed Dilsukhnagar as the location for a possible terror strike. (Read: Hyderabad blasts despite intelligence reports, says Sushma Swaraj)
Investigators who combed the debris in Dilsukhnagar yesterday said the two bombs used were packed with huge amounts of iron nails and bolts and ammonium nitrate tied together with copper string. This made the explosions very powerful, they said. (Read: Blasts triggered by IED)
Crucial forensic evidence may have been destroyed by crowds swarming the area last night, who ignored police orders to leave the area for several hours.