I mean if there are less floating shares then there is low chances of buying and selling of stocks.

For example in India a Promoter can hold maximum 75% stake in his/her company and if the Foreign Institutional Investors grab another 12% and Domestic Institutional Investors take another 10% then there will only be around 3-5% of free floating shares that can be traded on a daily basis which makes it hard for Retail Investors to get in on the Action.