Having appreciated that we need to keep an eye on interest rates for investing in bonds the next question is how do we know when rates are expected to fall/ rise?

You don't even need to read the business newspapers for this. Even in general dailies you will get talking heads making statements about the need for interest rates to go up/ down.

Like in the current scenario, there are many (including 'yours truly') who believe that interest rates have come down as much as they could have and should have (by interest rates we mean CRR, repo, reverse repo which have been explained in one of the previous articles) and hence going forward, the probability of interest rates moving southwards from here, is very little.

Since October 2008 the RBI has aggressively cut the above-mentioned policy rates. By this what has happened is that banks have lot of money with them (see reverse repo explanation in the previous articles).

By reducing these rates, it is anticipated that banks will lower rates on FDs. High interest rates on FDs are good for us but for the bank they represent a higher interest outgo. So when RBI cuts key rates, banks will in all likelihood reduce FD rates, thereby reducing the cost of garnering these deposits for the banks. Hence banks can pass loans to borrowers at lower interest rates.