Nainital and its candles are synonymous. From tacky to funky to downright beautiful, they come in all shapes and sizes. The Barra Market at Mallital is lined with shops selling candles. Worth checking out is tucked in a corner as you climb up, on the first floor. The designs here are innovative and stylish.
Nainital is also a great place to pick up natural preserves - an excellent variety of fruit squashes, jams, jellies, pickles and marmalades - all locally produced, are available in shops lining the Mall. You can also pick up wooden wares being sold on kiosks, a fad picked up from Shimla's Lakkad bazaar. Although the variety is lacking here, the wooden key chains and likes make good souvenirs.
Also visit the Tibetan Market at the Flats, a flea market area selling junk jewellery, bags, scarves, fake branded watches and so on. If you look closely, and haggle intelligently, you can pick up some good bargains.
On your way from Nainital to Bhowali (15 minutes away from Nainital on the way to Haldwani), be on a lookout for Zaika which lies on the main road, away from both towns. Run by a husband-wife duo, the store sells home-made organic products, everything from pickles, chutneys and fruit preserves to medicinal oils, beauty products and herbs. The owners are hospitable and while you browse through the walls stacked with innumerable products, they will brew you lip smacking masala chai and swap stories of life back in the 'plains'.