The victims were identified as Sukwaro Topno (45) and her elder sister Mangri Topno (50), the police said.
In an attempt to mislead the police, the killers dumped the bodies on the Hatia-Rourkela rail tracks near a jungle, the police said.
Superintendent of Police Bhimsen Tuti told reporters that a land dispute was the reason behind the incident and the killers were related to the victims' family.
The police have lodged an FIR against two persons and launched a massive hunt to apprehend the culprits, Tuti said.