This is a mortifying situation. Firstly, you have to face the fact that your sister has seen something inappropriate. You need to communicate with her. Try to be as honest as possible without going into too much detail. Say that it's a private act that should not have been witnessed by her. Then, think about how this could have been prevented. Maybe it's time to create a more private area for yourself or be more aware of your sister's whereabouts. Also, be prepared for some possible changes in your relationship with your sister, and work towards rebuilding trust and normalcy.
When caught by your little sister in such an embarrassing situation, you should try to handle it gracefully. Immediately stop what you're doing and cover up. Then, depending on your sister's age and understanding, have a conversation. For younger sisters, just keep it simple and say it's not a good thing for her to see. For older sisters, you can explain that it's a normal part of adult privacy. In any case, always ensure better privacy in the future.
The first step is to compose yourself. Don't let the panic take over. Then, you need to talk to your sister. If she's young, you can just say it was a mistake and you won't do it again. If she's older, you might need to have a more in - depth conversation about privacy. Also, make sure to set up better privacy measures in your living space. For example, always lock the door when you need private time.