Business at Wakulima market yesterday morning came to a standstill after heavily armed Mungiki men raided the busy wholesale outlet.
Several loaders and traders were injured in the 5.00 am incident that led to the closure of the market.
More than 5,000 traders marched to Harembee House where they were barred by armed police officers from seeing Internal Security minister Chris Murungaru over the raid.
It took Nairobi Provincial Commissioner Francis Sigei more than 15 minutes to convince the traders to return to the market.
Nairobi police boss Jonathan Kosgei said 16 people suspected to be followers of the outlawed sect were arrested.
The loaders' leader, Mr Job Kimani, said Mungiki youth have been forcing traders to pay them money before their goods could be offloaded from trucks.
"More than 40 of them attacked me recently because they wanted my people to be withdraw from the loading business," he said.
Suspected sect members who were carrying machetes pounced on loaders who had started removing vegetables and fruits from the trucks that had arrived at dawn. Two people were seriously injured and were taken to Kenyatta National Hospital.
The traders who had run away from the market regrouped and later marched to Harambee House to ask for security.
The PC, accompanied by Nairobi Mayor Joe Aketch, CID boss Peter Kavila, Kosgei and several police officer asked the traders to pick representatives to air their grievances.
The hawkers rejected their chairman, identified as Willie, claiming he was betraying them to Mungiki members.
Those selected to speak said the members of the sect had taken over the market and were terrorising them in the presence of Nairobi City Council askaris.
"They hide at the video shop right outside the market and harass our loaders and handcart pushers," they said.