Pellegrini reckons the Argentine fills an important hole in the City squad.
Otamendi joined City from Spanish giants Valencia in a £32million deal this week.
“I think that we needed a centre-back,” said Pellegrini. “We analysed different options and we decided that Nicolas Otamendi was the best option. I think he is a very good player, he is improving.
“I know him from when he played in Porto with Mangala, both of them against (Pellegrini’s former team) Malaga in the Champions League. Last season with Valencia, he had a very good season.
“(But) In this moment, in the way we are playing, it is impossible to move Kompany and Mangala from their positions, and all the rest of the players. They are in a good moment.”