Top seed Grandmaster Koneru Humpy suffered her second successive loss to go down 0-2 in the North Urals Cup at Krasnoturinsk, Russia.
Humpy, who played black, was outplayed by French International Master Marie Sebag and fell to an advanced a-pawn in her second-round game which lasted 46 moves.
The Indian's defeats in the first two rounds have been the biggest shock of the tournament as she is the only player in the category-19 event here above ELO 2600 and continues to languish at the bottom of the points table.
"The opponents are strong and it is difficult to predict who will be the leader," Humpy had said in her first press conference in the tournament.
On the other hand, former World Women's Champion Antoaneta Stefanova of Bulgaria won her second game on the trot to retain her sole lead in the strongest women's tournament ever.
Unlike the opening round, all the matches were decisive in the second round.
In the third round, Humpy will play Swedish Pia Cramling, who succumbed to an error in her game against the reigning world champion Xu Yuhua from China.
Anna Muzychuk (Slovenia), Anna Ushenina (Ukraine) and Natalya Pogonina (Russia) are the other players featuring in the tournament.