Dear Anand,
The scenario described by you is not possible for the SAP NW Portal 7.01 because with this version the AS Java accepts SAML assertions for Single Sign-On but unfortunately it cannot act as an SAML authority that issues such assertions. More details you will be able to find in the documentation of the EHP1 for SAP NetWeaver 7.0 here: Using SAML Assertions for Single Sign-On
Please, consider the options for upgrade of your SAP NetWeaver to a more recent release.
Kind regards,
Donka Dimitrova