Sharma now has an overall score of three-under 137 and is one stroke ahead of local golfer, Vijay Kumar.
The cut was declared at 12-over 152 on a day that witnessed rain and windy conditions.
Sudhir, the overnight leader, made two birdies and an equal number of bogeys in his second round. Sudhir sank a five-feet putt for birdie on the fourth and converted an eight-footer for birdie on the fifth.
He missed a couple of chip-putts for bogeys on the second and 11th. A score of 70 was good enough for him to maintain his lead.
"My hitting was totally off the mark today and that's the reason I could not make enough birdies. My putting kept my hopes alive as I made some good par saves from five to six feet on the 13th, 14th and 15th holes. If I have to stay ahead of the experienced Vijay in the final round, then I will have to improve on my hitting," said Sudhir.
Veteran and defending champion Vijay shot the day's best score of one-under-69 to take his total to two-under-138. He made three birdies against two bogeys on his home course.
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"The conditions were tough due to the rain and wind and therefore I'm quite happy with my effort of one-under-69. I made a 20-footer to birdie the 16th and hit it very close for birdies on the 10th and 15th. The local knowledge will definitely help me in the final round," said Vijay.
Another local golfer, Sanjay Kumar is placed third at even-par-140.