Gurudwara Sri Baoli Sahib stands just behind Gurudwara Sri Nanakmatta Sahib. When the Sidh yogis of the area used their powers to dry up every river and well nearby and then challenged Guru Nanak Dev Ji to bring water back, Guru Sahib sent Bhai Mardana Ji to the nearest river with a spade, instructing him to drag it back toward this spot without ever looking behind him.

Bhai Mardana Ji did as told, and the river obediently followed the trail of his spade — until, doubting his own eyes, he glanced back to see if it was truly coming. At that instant the river stopped exactly where it was. The Sidhs then tried with all their occult power to move the river further themselves, and failed completely, finally bowing before Guru Sahib in defeat. A baoli was built here soon after to mark the spot.