Neither transfer is yet finalised, a source told ESPN FC, although City are expected to bring in both players, who will become their first signings of the summer.
Sagna announced in May that he would leave Arsenal, his home for the last seven years, when his contract expires at the end of June. His agent said last week that, although Inter Milan and Napoli also showed interested in the 31-year-old, he is bound for the Etihad Stadium.
City first bid for Porto central midfielder Fernando, who is likely to cost around 16 million pounds, at the end of the January transfer window. Although a deal could not be completed then, City have renewed their interest in the 26-year-old, who has Portuguese citizenship.
The signing of Fernando could allow Pellegrini to sell or loan out Jack Rodwell, who barely featured in an injury-hit season last year.
The arrival of right-back Sagna is likely to spell the end of the City career of Micah Richards, their longest-serving player, who only made two league appearances last season.
City also want to sign a central defender, with Porto’s Eliaquim Mangala the top target, after Joleon Lescott was released at the end of his contract.