India collapsed to 444 all out on the fourth morning of the first Test in Adelaide to give Australia the chance to build a 105-run advantage before lunch.
The tourists resumed on 369-5, and they made a solid start to the day as Rohit Sharma and Wriddhiman Saha battled through opening spells from Ryan Harris and Mitchell Johnson.
However, the return of Nathan Lyon (5-134) proved to be crucial as the spinner removed Sharma for 43 with a smart return catch, before Peter Siddle struck debutant Karn Sharma's leg stump.
Mohammed Shami took advantage of being dropped by Siddle off the bowling of Lyon to score 34 runs off 24 balls, but Australia's off-spinner would take the edge of Saha to allow Watson to take a smart catch.
Lyon completed his five-wicket haul by removing Ishant Sharma, and it was left to Siddle to finally catch the edge of Sharma to end the innings.
David Warner (13*) and Chris Rogers (19*) were asked to negotiate a 10-over spell before the interval, and both looked comfortable at the crease as the hosts kicked off a crucial day by reaching 32-0 in their second innings.
