The Foxes have been heavily linked with a move for the Doncaster Rovers striker in recent weeks, with one bid already believed to have been rejected.
Instead of being worried for his place in the team, Nugent has taken a positive stance on Sharp's possible arrival.
"More the merrier," Nugent told the Leicester Mercury. "We need competition for places.
"I heard we had an offer for Billy Sharp rejected but, if he does come in, then fair play, because he is a goalscorer.
"He is a six-yard-box tap-in player, and it is good to have competition."
Nugent joined Leicester in 2011 from Portsmouth.