New Zealand held their nerve to edge out Australia by eight runs in a tense World Twenty20 Group Two match on Friday and move closer to a place in the semi-finals.
On a high after beating hosts India in their opening game, New Zealand posted a modest 142-8 before defending the total with disciplined bowling and tight fielding against their trans-Tasman rivals.
Australia came into the tournament with an embarrassment of top-order riches and decided to open with Usman Khawaja and Shane Watson.
The decision meant no place for Aaron Finch, who was captain of the side barely six weeks ago and is the top-ranked batsman in this format of the game.
Khawaja (38) added 44 runs with Watson (13) before Australia suffered a collapse to slump to 66-4 at the halfway mark of their innings.
Glenn Maxwell (22) and Mitchell Marsh (24) tried their best but Australia kept losing wickets at regular intervals and needed 19 runs off the final over sent down by Corey Anderson.
Anderson dismissed James Faulkner with the first ball to dash Australia's slender hopes of a narrow win as New Zealand rose to the top of the group table.
"I thought around 150 was about par," Australia captain Steve Smith rued. "Obviously their spinners bowled extremely well in the middle and we didn't respond well.
"We lost wickets in clumps which you can't do in T20 cricket...we just did not get any partnership."
Mitchell McClenaghan justified his selection at the cost of off-spinner Nathan McCullum, claiming figures of 3-17. Spin duo of Mitchell Santner (2-30) and Ish Sodhi (1-14) also troubled Australia.
"Our spinners were fantastic and brought us back to the game," McClenaghan said after collecting the man-of-the-match award.
"It's nice to show some teams that we can play in these conditions...but there are two more games and in this format, we still got to win two more games to get through," he added.
Earlier, Martin Guptill (39) gave New Zealand a flying start in a 61-run opening stand with skipper Kane Williamson (24) who decided to bat first on a dry track at the picturesque stadium in the north Indian hill station.
Guptill greeted Aston Agar by hitting his first two balls out of the ground and a third six off the final ball of the over ensured the left-arm spinner was swiftly removed from the attack.
Maxwell proved why he is such an asset for the side, taking a catch in the deep to send back the dangerous Guptill, dismissing Williamson with his second delivery and sending back Anderson in his next over.
The 27-year-old remained in the thick of things, taking another catch to dismiss Luke Ronchi and firing in a bullet throw to run out Mitchell Santner.
Grant Elliot struck a quickfire 27 down the order but New Zealand managed only 84 runs in the last 14 overs.
New Zealand beat Australia by 8 runs to stay on top of Group 2 after their second successive win on Friday.
Chasing a target of 143, Australia were restricted to 134-9.
Marsh clubs a gigantic six off Santner while Maxwell has sliced Sodhi. Aus 100-5, 15.1 overs.
Glenn Maxwell c Williamson b Sodhi 22 (23b 2x4)
Santner has struck again as Warner fails to clear the fielder on the fence. Aus 66-4, 10.1 overs.
David Warner c Guptill b Santner 6 (11b)
A bullet return from Milne in the deep accounts for Khawaja. Aus 62-3, 9 overs.
Usman Khawaja run out 38 (27b 6x4)
Santner has struck in his first over luring out Smith who is stranded by a mile. Aus 51-2, 6.4 overs.
Steven Smith st Ronchi b Santner 6 (7b 1x4)
Watson slices McClenaghan to midoff as New Zealand get a breakthrough. Aus 44-1, 5.2 overs.
Shane Watson c Williamson b McClenaghan 13 (12b 1x4)
Australia are on a roll getting a couple off boundaries off Elliott including the first by Watson. Aus 30-0, 3 overs.
Khawaja is on the charge smashing more boundaries off Milne. Aus 20-0, 2 overs.
Australia are off to a flying start chasing 143 with Khawaja cracking a couple of boundaries off Anderson. Aus 11-0, 1 over.
New Zealand innings
Australia have restricted New Zealand to 142-8 after the Black Caps were off to a flying start.
Grant Elliott run out 27 (20b 3x4)
Mitchell Santner run out 1 (1b)
Another one bites the dust as Falkner strikes. NZ 133-6, 18.5 overs.
Luke Ronchi c Maxwell b Faulkner 6 (7b)
Taylor perishes hitting Watson straight to midwicket. NZ 117-5, 16.4 overs.
Ross Taylor c Marsh b Watson 11 (11b 0x4 1x6)
Munro perishes miscuing Marsh to the midwicket fielder. NZ 97-4, 14 overs.
Colin Munro c Faulkner b Marsh 23 (26b 2x4)
New Zealand are stumbling as Maxwell and Agar combine again to remove the dangerous Anderson. NZ 76-3, 10.3 overs.
Kane Williamson c Agar b Maxwell 24 (20b 4x4)
Maxwell has struck getting rid of Williamson who holes out to Agar. NZ 66-2, 8.2 overs.
Kane Williamson c Agar b Maxwell 24 (20b 4x4)
Australia get a breakthrough as Guptill is held on the boundary. NZ 61-1, 7.1 overs.
Martin Guptill c Maxwell b Faulkner 39 (27b 2x4 4x6)
Guptill has smashed another six off Coulter-Nile as Black Caps power their way to 58-0, 6 overs.
Guptill is on fire belting three towering sixes off Agar. NZ 32-0, 3 overs.
Williamson gets a boundary by flicking Watson off his toes. NZ 14-0, 2 overs.
Guptill hits the first boundary of the match edging Coulter-Nile past the vacant slip to third man followed by a crunching on drive. NZ 9-0, 1 over.
New Zealand have won the toss and elected to bat in their Super 10 Group 2 match against Australia at Dharamasala on Friday.
Australia: Usman Khawaja, Shane Watson, Steve Smith, David Warner, Glenn Maxwell, Mitchell Marsh, James Faulkner, PM Nevill, Ashton Agar, A Zampa, Nathan Coulter-Nile
New Zealand: Martin Guptill, Kane Williamson, Colin Munro, Corey Anderson, Ross Taylor, Grant Elliott, Mitchell Santner, Luke Ronchi, Adam Milne, Mitchell McClenaghan, Ish Sodhi
Australia begin their latest quest Friday to clinch the elusive crown of World Twenty20 champions against a New Zealand side who are on a high after their stunning victory over tournament hosts India.
Steve Smith's side top the Test rankings and won their fifth 50 over World Cup last year by crushing New Zealand in the final in the Melbourne Cricket Ground.
But for all their dominance in the older formats, Australia have struggled in 20 over cricket and have only once made the final of the World T20, back in 2010 when they lost to England.
Veteran all-rounder Shane Watson said Australia would not hold back from reminding their trans-Tasman rivals about the outcome of last year's World Cup when they meet again in Friday's match in Dharamsala.
But he acknowledged the Black Caps would be no pushovers this time and would be full of confidence after their shock 47-run victory over red-hot favourites India on Tuesday.
"We are going to have to play very well because they are going to be very confident leading into this game," Watson told reporters in the Himalayan hill town which is home to the Dalai Lama.
A 3-0 home defeat to India in January underlined Australia's frailties in T20 cricket although there were encouraging signs earlier last month when they beat South Africa 2-1 away.
In Johannesburg, Glenn Maxwell spanked a career best 75 off 43 balls in a world record fourth wicket stand of 161 with David Warner, highlighting the all rounder's growing importance to the team.
"Glenn Maxwell is a huge player in our team," said Watson.
"The way he bats, whether the ball is turning or whether it's not turning, his array of shots when he gets into his innings is incredible. He hits the ball around the ground."
Maxwell is also expected to be busy bowling his offbreaks against a side who struggled against India's spinners.
New Zealand spinners Ish Sodhi, Mitchell Santner and Nathan McCullum shared nine wickets against the Indians, leaving the selectors with a headache over whether to bring back pacemen Trent Boult or Tim Southee.
Coach Mike Hesson has been trying to keep the team's feet on the ground since the India win, telling New Zealand radio that qualification for the semis in a pool that also includes Pakistan and Bangladesh is a tough ask.
"Great start for us but we know that even just getting out of the pool is going to be incredibly difficult," he told Newstalk ZB.
New Zealand (from): Kane Williamson (captain), Corey Anderson, Trent Boult, Martin Guptill, Grant Elliott, Colin Munro, Mitchell McClenaghan, Nathan McCullum, Adam Milne, Henry Nicholls, Luke Ronchi, Mitchell Santner, Ish Sodhi, Tim Southee, Ross Taylor
Australia (from): Steven Smith (captain), David Warner, Ashton Agar, Nathan Coulter-Nile, James Faulkner, Aaron Finch, John Hastings, Josh Hazlewood, Usman Khawaja, Mitchell Marsh, Glenn Maxwell, Peter Nevill, Andrew Tye, Shane Watson, Adam Zampa