A bomb attached to a handcart exploded in Kabul on Friday, police said, killing two people in an area largely inhabited by Afghanistan's Shia minority community.

Shias in Afghanistan are currently commemorating the first 10 days of the Islamic holy month of Muharram, culminating in Ashura on Monday, when worshippers gather at mosques and take part in processions.

The explosives were attached to a handcart loaded with vegetables and parked in an area where residents shopped for daily food items, Kabul police spokesman Khalid Zadran told reporters.

"The explosion took place amongst civilians, and according to preliminary information two of our citizens were martyred and three others were wounded," he said.

The blast occurred in a west Kabul neighbourhood that is mainly inhabited by members of the ethnic Hazara community, who are mostly Shia Muslims.

The blast came just days ahead of Ashura, which marks the death of the revered Imam Hussein Ibn Ali, grandson of the Prophet Mohammed (PBUH).

No group has so far claimed the blast, but Daesh has regularly targeted Shias in Afghanistan in the past.

The number of violent public attacks across the country has fallen since the Taliban returned to power in August last year, but Daesh has continued to target shias.

The minority group makes up between 10 to 20 per cent of Afghanistan's population of 38 million.

Taliban officials insist their forces have defeated Daesh, but analysts say the group remains a key security challenge.