I read this as someone who is acting out things that have happened to her. Who is in her life that could have been touching her in the way she is touching her little sister and making her feel so powerless and vulnerable and angry that she feels compelled to do it to someone else?
I agree with mammo, and also have to say, don't turn your back on this children when they are together. This is well beyond natural looking and touching, she is hitting this child with a stick. And when asked what she was doing, she thought it would be a fine answer to state she was hitting her sister in the stomach. It's untrue, but like, why did she think THAT would be okay? You don't say what she's like otherwise - whether typically she's kind and thoughtful, and empathetic and respectful, but the picture you paint here in this post, I wouldn't allow her ever to be alone for a moment with a child smaller than she is.
I think this goes well beyond curiosity, and it's could cause your younger daughter some emotional damage. I would take your oldest daughter to a professional in child behavior and find out what's going on. This seems to be a constant thing with her, she needs help now, and you need to think about where she has learned this thing with laying on top of her sister, and what it's doing to her younger sister.