Flag sign is seen in:

In Kwashiorkor hair is thin, dry, brittle, easily pluckable, sparse & devoid of their normal sheen. It becomes straight and hypopigmented. The colour of the hair that grows during the period of nutritional deprivation appears reddish brown. During the phase of better nutrition, the growing pa of the hair gets appropriately pigmented. This gives appearance of alternate bands of hypopigmented & normally pigmented hair. This is called Flag sign. Ref: O.P.Ghai, 6th Ed, Page 105