The England international was taken off after just 20 minutes with a suspected hamstring injury as his side went down in Melbourne during their pre-season tour of Australia.
City boss Manuel Pellegrini, who only secured the signing of the midfielder last week, said afterwards: “Unfortunately, it looks like Fabian has a problem with his hamstring – we thought it would be useful for him to play 45 minutes but he got the injury so it’s not the best news.
“We will have a more clear diagnostic from the doctor tomorrow,” he told MCFC.co.uk.
Fellow Three Lions internationals Joe Hart and Raheem Sterling were also included in the starting line-up, as was England Under-17s international Cameron Humphreys.
The 16-year-old centre-half will rarely face a more difficult test than that he faced at the Melbourne Cricket Ground as he faced up against Madrid’s front three of Karim Benzema, Cristiano Ronaldo and Gareth Bale.
It was Benzema and Ronaldo who struck the Spanish giants into the lead in quickfire fashion before Pepe added a third. Sterling won a penalty for City and Yaya Toure converted to pull the score back to 3-1 before half time, but a second half strike from Denis Cheryshev sealed the 4-1 scoreline.
Patrick Roberts, an England U19s international who joined City from Fulham last week, appeared for his debut as a late sub.
Despite the setback, goalkeeper Hart believes the Citizens will be ready to hit the ground running when the Premier League kicks-off next month.
"We didn't play to the pitch and the pitch was big. We were a little disjointed but there's lots to learn from it,” he said.
"Lots of us haven't had many minutes and we are still missing the South American guys. The team is going to get stronger, we'll be fitter and ready for the new season."