E. F. Hutton & Co., which pleaded guilty Thursday to defrauding hundreds of banks by systematically overdrawing its accounts, was barred yesterday from competing for some business of New York City and West Virginia.

The brokerage firm's parent, E. F. Hutton Group Inc., also faced a class action suit by a shareholder and the prospect of a lower credit rating from Moody's Investors Services.

E. F. Hutton & Co. pleaded guilty to a scheme that defrauded up to 400 banks through daily overdrafts during a three-year period ending in 1982. Some of the overdrafts exceeded $250 million, giving the brokerage firm millions of dollars in interest-free loans at a time when interest rates were near 20 percent.

One security analyst downplayed the impact of the guilty plea on the firm's business, however. And Hutton's stock, which fell 3 1/2 to 29 on Thursday, recovered 2 1/2 yesterday to close at 31 1/2 on trading of more than 1 million shares.

"I tend to think it will have a minimal impact on their relationships with customers," Joel Rosenthal, an analyst with Jesup & Lamont Securities Co. Inc., said of the case. "My recommendation yesterday to my clients was to buy the stock when it went below $30."

New York officials said yesterday the city will temporarily refuse to do business with Hutton, one of many brokerage houses that handle the sale of its municipal bonds. A spokesman for the city comptroller said Hutton would be dropped from the sale later this month of municipal bonds worth $555 million.

New York Mayor Edward Koch said the city would do business with E. F. Hutton again after that sale, but criticized U.S. Attorney General Edwin Meese III for not seeking indictments against individuals involved in the scheme.

"Our general view is that a realistic threat of jail is needed to deter and punish crime. If this is true for welfare fraud or street crime, it is also true for corporate crime," Koch said.

A Hutton spokesman said yesterday that the company has assumed responsibility for the crimes and that "no individual has been found guilty of anything."

The employes involved "were not aware they were doing something illegal or contrary to company policy," the spokesman said.

The State of West Virginia said it has barred E. F. Hutton from participating in any state investments. Hutton had bid on state investments "on a regular basis" and has served as broker on some, said West Virginia Treasurer A. James Manchin, who called the company "a vulture on the limb of life."

"They did nothing that violated their relationship with customers, or put their clients funds at risk," Rosenthal said. "They have at least a million accounts, certainly the loss of a few wouldn't have a significant impact."

Moody's, which said it would review Hutton's debt rating, said it would consider "the potential impact on future operations, particularly on the company's client base."

Hutton's senior debt, worth about $230 million, is now rated A3, "a pretty solid investment grade rating," said Don Noe, associate director of Moody's financial institutions group.

Hutton has agreed to pay a fine of $2 million and the government's investigation costs of $750,000, and to set aside $8 million to pay restitution to the banks.

Moody's said in a statement that its review also will focus on "Hutton's possible future liabilities to the banks involved beyond the amount reserved, its internal financial controls and the implication of the Securities and Exchange Commission's investigation."

The SEC has given Hutton a temporary exemption from a requirement that it be barred from acting as an investment adviser while it decides whether to make the exemption permanent.

The class-action suit filed against Hutton yesterday accuses the firm of concealing information about the scheme from shareholders.

Harold L. Hancock, who owns 300 shares of the company's stock, said in his suit that Hutton filed false and misleading information with the SEC when it was aware of the criminal violations and the potential fines and sanctions involved.