India are still 52 runs short of Australia's first innings total of 300 as atleast three batsmen failed to convert their starts into big knocks.
With the pitch offering significant turn along with good bounce, batting will only get difficult in the third and fourth innings in what promises to be a battle of attrition in the next three days.
Playing a batsmen short, opener Lokesh Rahul's indiscretion cost India dearly. India never got the required momentum after Rahul's ill-timed pull-shot off a Patrick Cummins bouncer. He scored 60 off 124 balls.
India were comfortable placed at 108 for one before Rahul's dismissal and could have pushed for lead but are struggling to level the scores at least.
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After probing spells by the new ball bowlers Josh Hazlewood (1/40 in 18 overs) and Pat Cummins (1/59 off 20 overs), it was off-spinner Lyon (4/67 from 28 overs), who tormented the middle-order was once again in the final session of the day which belonged to Australia.
The final session in which India scored 95 runs saw them lose as many as four wickets - all trying to be defensive against Lyon.
It could have been worse had Wriddhiman Saha (10 batting) catch would have been taken by Matt Renshaw at first slip. But if the Indian innings had a turning point, it was Rahul, who again raised visions of a big score before throwing his wicket.
Rahul looked comfortable during his knock of 60 - his fifth half-century of the series - before a sudden rush of blood saw him play a pull shot off a Cummins short ball only to offer a simple skier to David Warner at cover.
The dependable Pujara kept his focus intact en route his 15th half-century but was out after tea with Lyon producing a classical off-break, flight and turn which he gloved to Peter Handscomb at forward short leg.
Pujara played some glorious on-drives using his feet against both O'keefe and Nathan Lyon. The half-century came up with a whip through the mid-wicket region as he reaffirmed his status of being India's best batsman in the current series. His innings had six boundaries off 151 balls.
Skipper Rahane was shaky to begin with a mis-timed pull off Cummins that got him a six but grew in confidence during his 104-ball stay at the wicket which also fetched him seven boundaries.
Earlier, Rahul was elegant as ever during his innings but his duel with Cummins during the first and second session was worth watching.
With Australia playing on the bounciest of pitches, Cummins was used in short bursts as Rahul showed good technique while swaying away from the bouncers.
The spell that Cummins bowled in the post lunch session was a hostile one but Rahul punched the fast bowler through point region to get a boundary.
With India playing a batsman short, the dressing room must not have been a very happy place for Rahul for the indiscretion that he showed.
India began slowly during the first hour but courtesy Rahul picked up the tempo during the second hour as they ran well between the wickets and also punished the loose deliveries. The first boundary was an inside out cover drive off Lyon. He did survive a nasty Cummins delivery that flew past the slip cordon.
When Cummins bowled one into his ribs, he nicely tucked one off his hips to fine leg boundary. The shot off the day was an on-drive off Cummins that raced to the fence.
In the morning, Vijay hit a flowing cover drive off Hazlewood and got another off the bowler even though it wasn't a controlled shot. But Hazlewood had found his channel by then and was able to hit a few visible cracks from which the deliveries were deviating away. A faint nick was gobbled up by Matthew Wade with Hazlewood getting his first wicket.