The image becomes warped (distended) as Luka uses Fallen Angel Dance
One of Luka’s skills, the Fallen Angel Dance is a skill which Luka activates under the influence of holy power while he is asleep. When attacked, Luka will somehow evade it.
The effect used is a shorter version of the "sleep waves" as Luka is falling asleep in the beginning of the game just before he speaks with Ilias.