The famous Scotsman stepped into the job when the Reds sacked Roy Hodgson early in the New Year and has done a great job in restoring the pride of the Anfield club.
"It's a results business," he told MirroFootball. "If you look at the results from when [Dalglish] has taken over to right now, you can't lay one argument against him getting the job.
"Ultimately, the players will love it, the fans will love it. I think the club will do the right thing and appoint him. I would be shocked if they aren't talking to him right now."
And Nicol believes that the Reds can fight back into title contention next season even if this campaign is now a write-off.
"I don't think they will make it and I think, ultimately, it will help them because they won't be in the Europa League and they'll have time between Premier League games," he added.
"Next year is a year where Liverpool are really going to concentrate on that Champions League spot, number one, and, hopefully, trying to win the championship."