Afghanistan has marked a national day of mourning a day after a suicide bomber killed at least 80 people who were taking part in a peaceful demonstration in Kabul. The attack was claimed by Islamic State.

Authorities said 231 people were wounded, some seriously, in the bombing on Saturday afternoon at a march by members of the ethnic Hazara community, who are predominantly Shia Muslim. Most Afghans are Sunni, and Isis regards Shias as apostates.

The attack was Kabul’s worst since a Taliban insurgency began 15 years ago, and the first by Isis, raising concerns about its reach and capability in Afghanistan.

Bereaved families collected their dead from hospitals and morgues, and the first funerals went ahead in the west of the capital. Many people chose to bury their dead together with others rather than in traditional family plots, encouraged by organisers of Saturday’s demonstration, who call themselves the Enlighten Movement.

In a hilltop graveyard in the Surkh Abad suburb of south-west Kabul, hundreds of people, most of them men, braved high winds and swirling dust to conduct the Shia funeral rites. Simple wooden coffins covered in the green Shia flag were carried by men on their shoulders and lowered into graves that relatives had dug themselves with shovels.

In Omaid-a-Sabz, the grieving chose to bury their dead side by side in long rows. Mullah Mohammad Hassan Rasat said the Hazara people felt a deep sense of injustice and anger that the government had not kept its election promise to ensure development was equal for all Afghan ethnic groups. “Our people only want justice and equal development for all,” he said.

Afghan women mourn during the funeral of victims of the Kabul bombing. Photograph: Massoud Hossaini/AP

Hazaras account for up to 15% of Afghanistan’s population, estimated at around 30 million, and say they face discrimination. During the Taliban’s 1996-2001 rule, Hazaras were often brutally treated. The Taliban were quick to deny culpability for Saturday’s attack, however, issuing a statement before Isis claimed responsibility.

The attack has raised concerns about sectarianism, and the interior ministry announced a ban on public gatherings and demonstrations in an apparent attempt to avoid any inter-communal strife. A presidential spokesman said the ban on public gatherings did not apply to the funerals for Saturday’s victims.

Isis has had a presence in Afghanistan for the past year, mainly in the eastern province of Nangarhar, along the Pakistani border. The Afghan military, backed by US troops, is planning an offensive against Isis positions in Nangarhar in the coming days.

Prior to bomb attack, thousands of Hazaras had marched through Kabul on Saturday to demand the rerouting of a power line through the impoverished province of Bamiyan, in the central highlands. It was their second demonstration; the first was in May with a much better turnout and attended by senior Hazara politicians, who were absent from Saturday’s march.

The office of the president, Ashraf Ghani said march organisers had been warned to call off the demonstration after intelligence was received that an attack was likely.

Daud Naji, an Enlighten Movement leader, said on Sunday that they had been told only that there was a “heightened risk” of attack and had subsequently cancelled nine of 10 planned routes.

On Sunday Ghani attended a memorial prayer service in a mosque on the grounds of the presidential palace, his spokesman Haroon Chakhansuri said.

The office of the United Nations assistance mission in Afghanistan issued a statement conveying its “deepest condolences and solidarity” and noting that people of all ethnicities across the country were queueing at hospitals to donate blood for the wounded.

Hazara demonstrators have continued to occupy Demazang Square, where the attack took place as the march was winding down and some prepared to set up a camp, Naji said. They would stay until three conditions were met, he said.

Candles are lit at a memorial for the victims of the 23 July blast in Kabul, Afghanistan. Photograph: Jawad Jalali/EPA

The Enlighten Movement wished to have its own representatives, as well as others from international human rights organisations, involved in a commission Ghani has established to investigate the Isis attack.

The movement also wanted the power line rerouted through Bamiyan, as originally demanded. The multimillion-dollar regional project was routed away from Bamiyan by the previous Afghan government for financial considerations, according to people involved in the planning.

Thirdly, Naji said, they wanted the name of Demazang Square changed to Shahada (Martyrs) Square, “to honour the memories of those who were killed, along with a picture of everyone who died there”.

Ghani’s spokesman said the president has issued a decree to change the name of the square as the Hazaras had asked. He said Enlighten Movement members would be invited to participate in the investigation commission.

In response to the rerouting demand for the so-called Tutap power project, the spokesman referred to a contract signed on 21 June for the transmission of a 300-megawatt power line from the north into Bamiyan. Like the Tutap line, it is funded by the Asian Development Bank.

The death toll in Saturday’s attack was not yet finalised on Sunday, according to the interior ministry. The ministry said on Saturday that 80 people had been killed; Naji said the Enlighten Movement put the death toll so far at 84.