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Compressing avi file to small size mkv/mp4.

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This question has probably been asked a lot of times and I have read a lot of forums regarding this issue but haven't had a satisfactory answer so decided to ask the question myself.
So I have an avi file which is 700mb in size and what I want to do is convert it into an mkv or mp4 file at around 450mb without losing any quality by using handbrake 0.9.8 or if their is any other video converting software then please let me know.thanks in advance.
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I've never went from avi to mp4, but there's a related topic in this thread.
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