epa06597048 Roger Federer from Switzerland in action against Federico Delbonis of Argentina during the BNP Paribas Open at the Indian Wells Tennis Garden in Indian Wells, California, USA, 11 March 2018.
The defeat was just the fifth time in the past decade former world number one Djokovic has lost against a player outside the top 100 players in the world.
The 10th seed was appearing in his second tournament of the year (Round of 16 at the Australian Open) after undergoing a "small medical intervention" on his right elbow last month.
It was Djokovic's earliest loss at Indian Wells since his 2006 debut.
Federer said of the situation: "To me, it's not that surprising". "For me it felt like first match I ever played on tour. Very weird", Djokovic said.More news: Yankees signing Neil Walker for $5 million, AP source says
"I was grateful to be out on the court after surgery that quickly, but at the same time just didn't feel good at all", he said.
The score was deadlocked at 2-2 after 20-time grand slam champion Federer gracefully claimed the opening set 6-3 before rain wreaked havoc and suspended proceedings on Saturday.
"And not to mention as well, I've played so many tournaments as a kid here". Keeping it simple and maintaing a consistent plan of attack, Daniel worked Djokovic from corner to corner.
Chardy is now a set up with the second locked at 3-3.More news: Syrian forces advance against Ghouta rebels
Predict Matches to Win UNLIMITED PayTM Cash Prizes! It was his first main draw match win since reaching the final at the ATP Challenger Tour event in Canberra, Australia, in October.
Daniel defeated Djokovic 7-6 (7/3), 4-6, 6-1 in the hard-fought victory.
The 34-old, who has seven career titles, pounded down 12 aces, including six in the deciding set.
A final clash with second seed Marin Cilic remains on the cards - but the Croat must get past Philipp Kohlschreiber today first.
Djokovic had further surgery on a persistent elbow injury in February.More news: EPL: What Wenger said on Arsenal's 3-0 defeat of Watford
Daniel, who is ranked 109th in the world, advanced to the third round where he will face Gael Monfils of France who outlasted American John Isner 6-7 (5/7), 7-6 (7/3), 7-5. Over 4,000 winners daily.
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