Sector PE is the average price-to-earning ratio of a particular sector. Sector PE ratio is calculated as market capitalisation of the sector divided by gross earnings of the sector.
Market capitalisation of the sector is calculated as the sum total of the outstanding equity shares multiplied by the close price for each company of the sector. Similarly, the gross earnings is the sum total of annual earnings reported by each sector company.
The PE ratio is a measure to know how expensive the stock is when compared to scrips within the same sector. Sector PE ratio can be used as an effective comparison benchmark for this purpose.