Reliance Industries, controlled by billionaire Mukesh Ambani, should post its first quarterly profit increase

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in five quarters on theback of higher gas production from fields off India's east coast. India's top refiner and petrochemicals producer is looking to buy bankrupt LyondellBasell for around $13.5 billion to give it greater access to lucrative Western markets.

"This potential acquisition will give the company access to some premier customers in Europe and America," said Deven Choksey, chief executive of K.R. Choksey Shares and Securities. Phani Sekhar, a fund manager at Angel Broking, said: "The company is increasingly recognising it needs to grow inorganically and its balance sheet supports this idea."

Also this week, state-run Oil and Natural Gas Corp, India's largest oil producer, should post a 92 percent jump in October-December profit as oil prices firmed from a year earlier. Reliance should benefit as refining margins recover after almost halving in the December quarter, and as gas output from the Krishna Godavari (KG) basin reaches a peak of 80 million standard cubic metres a day (mmscmd) by April.

"The gas business is going to help the company's bottomline for this quarter and many more to come," Choksey said. "We believe new gas discoveries are also going to keep coming up." Reliance and Reliance Natural Resources, led by Mukesh's younger brother Anil, are embroiled in a legal battle over the terms of a deal to sell gas to Reliance Natural at below the price set by the government.

India's top court is due to rule on the dispute, and could determine whether Reliance Industries, India's biggest listed firm worth $79 billion, makes or loses billions of dollars through gas sales from its KG field. Its earnings, though, will have been helped by acquiring subsidiary Reliance Petroleum Ltd, which commissioned a new 580,000 barrels per day (bpd) refinery in December 2008.

The plant forms part of the world's largest refining complex, sitting alongside Reliance Industries' older 660,000 bpd plant at Jamnagar in western India. Analysts reckon Reliance's gross refining margins, a key measure of profitability, will have nearly halved to $5.3 a barrel in the December quarter, tracking the decline in Asia's benchmark Dubai crack margin.

"The refining business is cyclical, and will definitely improve in the coming quarters," said Angel's Sekhar. ONGC contributes about two-thirds of India's oil output, and operates under a complex government subsidy rule which means it would have to bear a bigger burden if oil prices rise further. "We like ONGC's business, but don't want to invest in this company because we know the government is going to keep interfering," Choksey said. ONGC is required to partially subsidise the sale of fuel to state-run retailers, who sell fuel at government-set, below-market prices.