diff --git a/autotests/unit/file/kinotifytest.cpp b/autotests/unit/file/kinotifytest.cpp
--- a/autotests/unit/file/kinotifytest.cpp
+++ b/autotests/unit/file/kinotifytest.cpp
@@ -44,6 +44,7 @@
     void testMoveFile();
     void testRenameFolder();
     void testMoveFolder();
+    void testMoveFromUnwatchedFolder();
     void testMoveRootFolder();
     void testFileClosedAfterWrite();
 };
@@ -351,6 +352,42 @@
     QCOMPARE(createdSpy.takeFirst().at(0).toString(), f4);
 }
 
+void KInotifyTest::testMoveFromUnwatchedFolder()
+{
+    // create some test folders
+    QTemporaryDir dir;
+    const QString src(QStringLiteral("%1/randomJunk1").arg(dir.path()));
+    const QString dest(QStringLiteral("%1/randomJunk2").arg(dir.path()));
+    mkdir(src);
+    mkdir(dest);
+
+    // Start watching only for destination
+    KInotify kn(nullptr);
+    kn.addWatch(dest, KInotify::EventAll);
+    QSignalSpy spy(&kn, &KInotify::created);
+
+    // Create stuff inside src
+    mkdir(QStringLiteral("%1/sub").arg(src));
+    touchFile(QStringLiteral("%1/sub/file1").arg(src));
+    mkdir(QStringLiteral("%1/sub/sub1").arg(src));
+    touchFile(QStringLiteral("%1/sub/sub1/file2").arg(src));
+
+    // Now move
+    QFile::rename(QStringLiteral("%1/sub").arg(src),
+            QStringLiteral("%1/sub").arg(dest));
+
+    QVERIFY(spy.wait());
+    QCOMPARE(spy.count(), 4);
+
+    // Checking if watches are installed
+    QSignalSpy spy1(&kn, &KInotify::deleted);
+    QDir dstdir(QStringLiteral("%1/sub").arg(dest));
+    dstdir.removeRecursively();
+
+    QVERIFY(spy1.wait());
+    QCOMPARE(spy1.count(), 4);
+}
+
 
 void KInotifyTest::testMoveRootFolder()
 {
diff --git a/src/file/kinotify.cpp b/src/file/kinotify.cpp
--- a/src/file/kinotify.cpp
+++ b/src/file/kinotify.cpp
@@ -421,7 +421,20 @@
                 Q_EMIT moved(QFile::decodeName(oldPath), QFile::decodeName(path));
             } else {
 //                qCDebug(BALOO) << "No cookie for move information of" << path << "simulating new file event";
-                Q_EMIT created(QString::fromUtf8(path), event->mask & IN_ISDIR);
+                Q_EMIT created(QFile::decodeName(path), event->mask & IN_ISDIR);
+                if (event->mask & IN_ISDIR) {
+                    Baloo::FilteredDirIterator it(d->config, QFile::decodeName(path));
+                    // First entry is the directory itself (if not excluded)
+                    if (!it.next().isEmpty()) {
+                        d->addWatch(it.filePath());
+                    }
+                    while (!it.next().isEmpty()) {
+                        Q_EMIT created(it.filePath(), it.fileInfo().isDir());
+                        if (it.fileInfo().isDir()) {
+                            d->addWatch(it.filePath());
+                        }
+                    }
+                }
             }
         }
         if (event->mask & EventOpen) {