A sector is an area of the economy in which businesses share the same or a related product or service. It can also be thought of as an industry or market that shares common operating characteristics. For example, Telecom sector involves all the companies that create telecom. Investors use sectors to place stocks and other investments into categories such as technology, healthcare, energy, utilities and telecommunications.
Each sector has its bellwether or benchmark stock, i.e. the one against which all the other stocks are compared.
The economy as a whole is divided into three main sectors: Primary, Secondary and Tertiary; within which further classification is done for in depth analysis.