Atwal, the only Indian to have tasted success on the PGA Tour in the US, but now playing in Asia, is now four-under 138 and four shots behind the leaders, Paul Peterson (66) and Rattanon Wannsrichan (69) at the halfway stage.
While Atwal led the Indians in the field, five others made the 36-hole cut in the USD 750,000 event co-sanctioned by Asian and Japan Tours.
Ajeetesh Sandhu (70-70) and Shiv Kapur (72-69) are Tied- 37th, with the latter improving from his first round position of T-78.
Atwal, the Asian captain at the recently concluded EurAsia Cup, began in style with three birdies in first four holes, but back-to-back bogeys on sixth and seventh set him back.
Two birdies on 12th and 14th ensured a good card and gave him a chance to make a charge over the weekend.
The Indians missing the cut included Khalin Joshi (71- 72), Jeev Milkha Singh (75-70), S Chikkarangappa (69-79), Chiragh Kumar (76-75), and Rahil Gangjee, who retired after the first round.
Peterson, who lost his playing status in Europe, had an encouraging run with five top-10 finishes on the Asian Tour in the last quarter of 2017.
Rattanon was left to rue several costly mistakes because of his bad tee shots but had his putter to thank for keeping him in the lead at the Pun Hlaing Golf Club.
Micah Lauren Shin of the United States continued his good form by returning with a 66 despite hitting four balls into the water hazards. The 2017 Asian Tour Rookie of the Year shared third place together with Korea's Junwon Park and Japan's Masahiro Kawamura.
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