The volume data gains importance or will be helpful only if used with price action in the stock.

Let's understand this with the permutations & combinations.

With the above table, we can conclude that in scenario 1- when institutional investors like a mutual fund or a significant market player like Mr. Raaakkkesh Jhunjhunwala buys shares of the company, they purchase a massive quantity of shares. In this case, the volumes will rise considerably, which will cause a sharp increase in the price. In the market, the moves by such institutional investors are considered significant & which generally copied by retail investors.

In scenario 2 – we can see that the price is increasing, but the volumes do not support it. This indicates that there is buying by retailers who buy in small quantities, but no significant player is involved in the buying. So, it would be best to be cautious while taking any long position in such a situation.

In scenario 3 - we can see that the price is decreasing, but the volumes do not support it. This indicates a sell-off by retailers who sell in small quantities, but no significant player is involved in the selling. So, it would be best to be cautious while taking any short position in such a situation.

In scenario 4 - - when institutional investors like a mutual fund or a significant market player like Mr. Raaakkkesh Jhunjhunwala sell shares, they sell a massive quantity of shares. In this case, the volumes will rise considerably, which will cause a sharp decrease in the price. In the market, the moves by such institutional investors are considered significant & which generally copied by retail investors.