Strnge behaviour of Mini Servo

I have this mini servo, that works fine if I source current directly from Arduino or desktop power supply, than mini-servo follows code instructions.

But if I source power from Ni-Mh battery, via voltage divider, than mini-servo, stops following instructions and just keeps rotating in one direction. If I attach a standard size servo to the same voltage divider circuit than standard-size servo follows the code without problem.

I checked the specs etc. I am pretty much within specs on the small servo. Please note that in the above picture Specs are for standard-size servo, not for mini-size servo.

But if I source power from Ni-Mh battery, via voltage divider,

That's not a good idea.
Use a proper regulator.

Edit: Why do you think you need to reduce the voltage?
R/C servos are designed to run off four packs of AA or AAA batteries.

The battery I am using is 7.4 V and servo should be around 5.0V. I didn't want to burn out the servo.

What is regulator? Can you please explain why do I need regulator? I thought batteries produce constant voltage by their nature?

A voltage divider will work for a high impedance because the lower half of your divider will have a high resistance in parallel with it, affecting the resistance, and hence the division ratio, only slightly.

A servo is most definitely NOT a high impedance.

The battery I am using is 7.4 V

The battery you show in your diagram is four AA.

Thanks.

What circuit should i use instead of voltage divider?

For efficiency, a DC-DC converter, for low-cost, a linear low-dropout regulator