Having played the entire weekend without dropping a shot at Genzon Golf Club last week, Larrazabal took control on Thursday morning with birdies on the tenth, 11th, 13th and 15th.
The 26-year-old Frenchman, however, took his game to the next level, holing from 30 feet on the third before putting his approach to three feet on the next hole to open up a two-shot lead over Larrazabal.
Levy made it four birdies in a row on the fifth but the Spaniard came back to stay in touch with the leader on the same hole and eventually remained just one stroke behind the courthouse leader at the end of the day.
"I played great," Levy said. "I hit 18 greens today and had some good putts for birdie, two or three long putts that helped but I played well last week and I am enjoying being back here and at this golf course.
"The golf is different day after day and I will try my best this week to do like what I did today."
England's James Morrison and Swede Peter Hanson were at five-under-par alongside Raphael Jacquelin of France and South African duo George Coetzee and Dean Burmester to share the third spot on the standings.
Jorge Campillo, Yi Cao, Jaco van Zyl and Joost Luiten finished tied eighth on the leaderboard after hitting four-under-par score of 68.
A late eagle on the front nine kept last week's champion Bernd Wiesberger in contention with a score of 69 to climb up to tied-12th alongside defending champion Li Haotong.
(Reporting by Hardik Vyas in Bengaluru; Editing by Andrew Heavens)
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