The visitors had begun at their overnight score of 255 for five, but could only add 25 runs for the loss of five wickets as Philander took three wickets for just six runs.
He finished with impressive figures of four for 61 from 27 overs, while Morne Morkel picked up three for 34, adding another two from last evening.
At lunch, Smith was unbeaten on 11 off 26 balls, and Peterson was on the same score off 34 balls, but inclusive of two boundaries here at the Wanderers stadium.
But the Proteas' openers regained their composure to play some attractive strokes whenever the ball was pitched up, to have an upper hand in the session.
Earlier, Steyn bowled three overs on the second morning but he failed to add to his tally, finishing with one for 61. Jacques Kallis (1-37) took a wicket as well, while Imran Tahir (0-47) and JP Duminy (0-30) had gone wicket-less in their short spells on day one.
Starting at 255 for 5, Indian skipper MS Dhoni (17 not out) and Ajinkya Rahane (42 not out) looked to build on the platform provided by Virat Kohli's hundred.
They started off well against Steyn and Philander, who were bowling with the second new ball, only 10 overs old.
Rahane struck the first boundary of the day in the 93rd over, punching Steyn through the covers. At the other end, Dhoni was fiddling with a few played and missed shots, as the South African attack learnt from their mistakes on day one and were bowling a lot fuller, closer to the stumps. It slowed down the run-scoring as both batsmen started looking to leave as many balls as possible.
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