What do we understand by low impact cost? It is the impact on the stock price when you place a large buy or sell order on the stock. Normally, a single order of more than 0.5% of the market cap of a company is considered to be a large order. When impact cost is high, the risk of intraday becomes too high and hence such stocks should be avoided for intraday trading. You surely don’t want a stock that moves three rupees by the time you complete your entire trade.
High impact cost means that the price at which you will get the stock could be unfavorable to you in case of large orders. That becomes a big hassle when you are already trading on very narrow and thin spreads. This will change the economics of your intraday trade. Prefer stocks that have low impact cost, which is normally another proxy for liquidity. Stocks that overreact or are too illiquid are not for intraday.
There are two more aspects to intraday trading from the point of view of impact costs. Firstly, check if the stock is widely owned? You can check out these details in the ownership pattern of the stock which is available on the websites of the exchange. Both the BSE and the NSE mention these items in great detail. You can also get cues from the trading pattern of the stock. Secondly, stocks which are not widely owned will be more volatile and will also hit circuit filters easily. When a handful of investors have control over the ownership, they also influence the trading patterns. That is because a handful of market operators will be able to corner these stocks quite easily if they are not widely owned. As an intraday trader, always prefer stocks that are liquid and widely owned. That will reduce your risk substantially as an intraday trader.