The world number 3 Indian surrendered 13-21 16-21 to Ratchanok Intanon of Thailand, a day after Denmark's Tine Baun stunned Saina 14-21 21-11 19-21 in her tournament opener.
Saina, a bronze medallist in the London Olympics, failed to put up a fight against world number 9 Ratchanok, who hardly broke a sweat to pocket the match in just 34 minutes at the China Resources Shenzhen Bay Sports Centre.
Seeded fourth, Saina looked a pale shadow of herself right from the start of the opening game as her Thai opponent took a 14-5 lead.
The 22-year-old Hyderabadi, however, made a spirited comeback by winning seven consecutive points to reduce the lead to 14-12.
Leading 15-13, Ratchanok had the last laugh and riding on her fierce smashes, the Thai girl won six straight points to pocket the first game.
Trailing by a game, Saina fought back in the second game. It was neck-and-neck between the two till 16 points when Ratchanok again took off and bagged the next five points on the trot to clinch the match.
Incidentally, this was Saina's first loss to the unseeded Thai player since November 2011. By virtue of today's win, Ratchanok has improved her head-to-head record against the Indian to 2-4.
Saina will next play world number 4 Juliane Schenk of Germany against whom the Indian has won seven of their 10 encounters.
Saina will now have to win big against Juliane besides keeping an eye on the outcome of the other group matches to keep her semi-final hopes alive.
