Morgan Stanley is expecting strong Q4 for most corporate and banking sector in India led by strong loan growth, higher underlying margins and improving asset quality

Interest income will be broadly steady across banks despite regulatory changes, given the pick-up in capital market activities and stabilisation in corporate banking segment, Morgan Stanley said in its report.

The investment banker stated that it prefers large liquid banks such as ICICI Bank , HDFC Bank, State Bank of India, Axis Bank and Kotak Mahindra Bank

Morgan Stanley expects slower revenue growth for non-banking financial companies. However, it said the large corporate banks is likely to show continued improvement in asset quality, with lower impaired loans and higher coverage.