Which server will ntpd daemon prefer for time synchronization if we have multiple servers in ntp.conf file

I read that ntp use all the servers for time synchronization.

Yes. Use at least 4 where feasible.

A better performing one is picked as the system peer, according to the selection algorithm. Including when ntpd starts, based on the first few timestamps received from all the peers.

In both startup or ongoing operation, NTP estimates what "NTP time" is. The ntpd -g option allows an infinite step, only once, in case the system clock is very wrong. VM resumed and time not corrected, failed or missing real time clock hardware, that kind of thing.

I have not specified prefer keyword also in the ntp.conf file.

Do not use the prefer keyword. The algorithms are good at estimating time keeping performance. Collect data to prove the hypothesis that you can pick a better peer, if you want to use prefer.