The 33-year-old said he was happy to be in London after being forced to pull out of last week's Paris Masters at the semi-final stage with an abdominal strain, but admitted he was not serving at full tilt ahead of his opening match against defending champion Alexander Zverev.
"I need to see how things evolve every single day," he said. "I have good hopes to be 100 percent ready for Monday."
Nadal is bidding to clinch the year-end number one spot in the ATP rankings for a fifth time -- he is currently 640 points ahead of Djokovic ahead of the season-ending tournament in London, starting on Sunday.
The Spaniard, who has never won the ATP Finals despite his trophy-laden career, dethroned Djokovic from the top of the rankings this week.
He has often struggled with injuries towards the end of the season -- missing the ATP Finals last year through injury and pulling out after just one match in 2017.
The top seed said he had only started practising his serving on Thursday and it had been "very slow".
"I don't want to lie to you," he said. "I have confidence that it can go well but I also have the doubt that it can go badly because the time from what happened in Paris until today is very short.
"I'm not feeling uncomfortable because I haven't really served. I've only served very slowly. With my training so far I don't have any kind of problem, I feel perfect, I don't have any kind of pain."
Nadal, who won the French Open and US Open this year, said he had been happy with his form before his injury.
"I'm confident that I can be very competitive but of course it's a tournament that you will face the top guys from the beginning so you need to be 100 percent ready," he said.
"I really hope that I will be able to serve every single day better."
Nadal's opponents in the Andre Agassi group are Daniil Medvedev, Stefanos Tsitsipas and Zverev.
The Bjorn Bjorg group features Djokovic, Roger Federer, Dominic Thiem and Matteo Berrettini.
- Djokovic hungry -
Djokovic, who won the Australian Open and Wimbledon this season, must reach the final in London to have any chance of overtaking Nadal at the top of the rankings.
The Serbian, who can claim a record-equalling sixth year-end number one finish, said he was hungry to finish the year on top.
"One of the two biggest achievements that you can have as a professional competitive tennis player -- winning a Grand Slam and being number one in the world at the end of the season," he said.
"At this stage of my career in terms of goals and achievements obviously that's right at the top. In order for me to be in the position to be year-end number one I understand I have to be healthy and schedule well."
The ATP Finals, featuring the year's best eight players, is contested in a round-robin format with the best four players and doubles teams reaching the knockout semi-finals stage.