DHARAMSALA: 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 Shane Watson (13) before Australia suffered a collapse to slump to 66-4 at the halfway mark of their innings.

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.