The explosion occurred in a district where dozens of civilians, members of the Taliban and government security forces were celebrating the cease-fire and the Islamic festival of Eid, said Attaullah Khogyani, a spokesman for the provincial governor.
Most of the dead and wounded were Taliban, said Stanikzai.
No group has claimed responsibility for Sunday's explosion but Saturday's was claimed by the local affiliate of the Islamic State of Iraq and the Levant (ISIL, also known as ISIS) group.
After the attack, Afghan President Ashraf Ghani announced a nine-day extension of the cease-fire.
Soldiers and militants exchanged hugs and selfies and joined together in prayer amid an Eid ceasefire to mark the end of the holy fasting month of Ramadan.
Afghan Muslims celebrated the start of the Eid al-Fitr holiday on Friday.
"I order the security forces to remain on their defensive positions", Ghani said, adding details of the extension would be released later. Observers say it is unlikely that the militant group will engage in any negotiations, as they now have the upper hand on the battleground.
Hundreds of militants re-entered the city with the weapons and vehicles they had seized from Afghan security forces the last time they overran the city.
Men and women gathered around the soldiers and Taliban terrorists, and urged them to keep their weapons holstered before they hugged each other.
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"There is no intention to extend the ceasefire", Taliban spokesman Zabihullah Mujahid told Reuters.
The Taliban are fighting US-led North Atlantic Treaty Organisation forces, combined under the Resolute Support mission, and the US-backed government to restore sharia, or Islamic law, after their ouster by US-led forces in 2001.
The chairman of the High Peace Council, a government body charged with negotiating an end to the almost 17-year war, called on the Taliban to accept the extended cease-fire and join the peace process.
Nangarhar is a province in eastern Afghanistan.
Afghanistan High Peace Council (HPC) on Sunday called on the Taliban to extend the ceasefire at the request of the people.
Both sides sang about peace and harmony and in Eid the environment during sermons was different than before, all the religious scholars and Imams spoke about the value, significance and importance of peace in Islam, ' the pesident noted.
"It was the most peaceful Eid".
"We hope that the extension of the cease-fire will be announced by the leadership of the Taliban", Mohammad Karim Khalili told a news conference in the capital, Kabul. "I saw Taliban and police standing side by side and taking selfies".
The United Nations Assistance Mission in Afghanistan (UNAMA) and the U.S. embassy in Kabul have both commended government and the Taliban for honoring the ceasefires. Rampant corruption in the Afghan government and a long tug-of-war within the US-brokered national unity government has had a negative impact on the government's efforts to eradicate terrorism. It is hard to describe the joy, ' said student Qais Liwal.