He then beat another veteran Boris Gelfand in the third round before losing to the American 15-year-old Christopher Yoo on Monday.
The 17-year-old prodigy from Chennai took on 53-year-old Ukrainian legend Ivanchuk in a battle of generations to take three points.
Ivanchuk bounced back from the setback against Praggnanandhaa to win his next three rounds.
Praggu, as he is known in chess circles and who beat World Champion Magnus Carlsen twice this season, was on his way to first place after three wins, but was fed back by a loss in the final round.
Carlsen got off to a strong start, leading by one point after the opening day of the tournament.
He scored victories over India’s Arjun Erigaisi, Adhiban Baskaran and Liem Quang Le, with only Dutch number 1 Giri stopping him from taking the maximum 12 points. He is at the top with 10 points.
Behind the favorite are four players on nine points, including Praggnanandhaa, American Hans Niemann and Arjun Erigiasia.
Meanwhile, 19-year-old Indian Erigaisi recovered from his opening round loss against Carlsen and scored three wins. He defeated Adhiban, Liem and Czech player David Navara.
After the preliminaries are completed, the tournament moves to the knockouts for a two-day final.
The eight-day event will run through September 25 and will feature 16 players across three generations.