Sharma, playing in the company of former two-time Open winner Padraig Harrington, was three-over through 11 holes before finding his first birdie of the day.
Atwal, the 2010 winner of the Wyndham, playing this week with a sponsor's exemption, looked set for a great start as he was four-under through 16 holes.
With only 21 players carding under par scores, Malik was the best of the three Indians at the tournament, co-sanctioned by the LPGA.
The teenager, who shifted base from India to US last year to further her golf career, was placed Tied-55th after the first round.
Sharma, who celebrated his 24th birthday on Tuesday, leaves early next week and will be in time for the start of Hero Open on Thursday.
The sports ministry submitted an affidavit to the Delhi High Court on June 16. If the court gives its approval, the three federations will have their suspension of recognition revoked.
To get recognition renewed, the body in charge of running amateur golf in the country has to submit a list of elected office-bearers.
The Indian Golf Union (IGU) will hold its long-awaited annual general meeting on June 9.
India, who had a total of 12-under from three best cards to be second after first two days, today slipped to tied fifth place with a total of seven-over from the three best cards.
Aadil Bedi was one shot behind the reigning Australian Amateur champion, Keita Nakajima of Japan, one of the favorites.