Every candle on a chart answers one question: where did price go? Volume answers the next question, which matters just as much: how many traders took part in that move?
A breakout candle on heavy volume tells you many participants agreed with the move. The same candle on thin volume tells you very few did. The candle looks identical. The volume below it changes how much you can trust it.
Why volume matters
Price action shows you the result of buying and selling. Volume shows you the effort behind it. When you read the two together, you can separate moves that have real participation from moves that do not.
- Effort and result agree: a wide candle on high volume. Many traders pushed price, and price moved. The move has support.
- Effort without result: very high volume, but a small candle body or a long wick. Buyers and sellers are fighting at that level. Expect a pause or a reversal.
- Result without effort: price moves, but volume is low. Nobody is pushing back yet, but nobody is committing either. Such moves fade easily.
Chapter 2 shows each of these on a chart. First, you need to know why index volume needs special handling.
An index has no volume of its own
You can buy Reliance shares or HDFC Bank shares. You cannot buy "Nifty 50" itself. The spot index is a calculated number: a weighted value of 50 stocks, recomputed as those stocks trade.
Because nobody trades the spot index directly, the exchange does not report a traded quantity for it the way it does for a stock. That is why many charting platforms show a spot index chart with an empty volume pane, or fill it with the volume of the index future instead.
The volume of the Nifty future is the activity of futures traders in one contract. The volume behind the Nifty index is the activity in the 50 stocks that make it up. They are related, but they are not the same thing.
How SAHI builds index volume
SAHI builds the volume of an index from the bottom up. It takes the live traded quantity of every stock in the index and adds them together, candle by candle. The result is a volume figure for the index itself, which updates in real time as the constituent stocks trade.
- HDFC Bank 2.1L
- ICICI Bank 1.8L
- SBI 2.6L
- Kotak Bank 0.6L
- Axis Bank 1.1L
- …and the rest 0.6L
Three things follow from this:
- It is real participation. The number comes from actual trades in the underlying stocks, not from a summary feed.
- It is live. SAHI refreshes index volume several times a second, so you see participation build while the candle is still forming, not after it closes.
- It powers the other indicators. VWAP, OBV and PVT all need volume. Once the index has a reliable volume, all three can be calculated on the index chart itself.
Which indices are covered
SAHI computes real-time volume for the major indices on both exchanges, including Nifty 50, Bank Nifty and FinNifty on NSE, and Sensex on BSE. Open the spot chart of any of these and the volume indicators work just as they do on a stock.
The four indicators
Once the index has volume, four indicators become available. Each answers a different question.
| Indicator | Question it answers | Type |
|---|---|---|
| Volume | How much traded in this candle? | Absolute |
| VWAP | What is the average price paid today, weighted by volume? | Relative (fair value) |
| OBV | Is volume flowing in on up candles or on down candles? | Directional, running total |
| PVT | Same as OBV, but weighted by how far price moved | Directional, running total |
- VWAP
- OBV
- PVT
Checklist
- Volume measures effort; the candle shows the result. Read them together.
- The spot index has no traded volume of its own. Futures volume is a different measure.
- SAHI adds up the live volume of the constituent stocks, so index volume reflects real participation.
- Volume, VWAP, OBV and PVT are available on Nifty, Bank Nifty, FinNifty and Sensex charts.