Sensex flat; government's rupee measures awaited

Reuters Market Eye - The benchmark BSE Sensex is up 0.2 percent, while the broader Nifty is down 0.1 percent. Investors remain cautious as the Reserve Bank of India's latest measures to drain cash via weekly cash management bill auctions fail to prop up the rupee much, with the currency remaining at near record lows.

Traders widely expect the government to announce measures of its own to attract foreign inflows in a bid to narrow the record high current account deficit.

Lenders decline as bond yields surge after RBI's steps, raising concerns about a hit to their significant government debt holdings.

State Bank of India falls 3.4 percent, with investors concerned that India's largest lender will announce an increase in loan defaults later in the day.

Drug makers gain. Sun Pharmaceutical Industries Ltd shares gain 7.3 percent after April-June earnings were seen as positive after factoring out a provisioning charge to settle a patent suit.

Cipla Ltd gains 3.8 percent after its April-June net profit rises 18.5 percent to 4.75 billion rupees.

ITC Ltd gains 1 percent after HSBC upgraded the stock to "overweight" from "neutral", while maintaining its target price of 400 rupees, citing prospects of earnings growth "resilience."

(Reporting by Abhishek Vishnoi)