This is derivative of the spanish word for fist 'puño', where la puñeta is defined as the thing you do with your fist. i.e. fisting off which is considered vulgar because it ellicites an image of a man stroking his penis with his fist to a point of climax.
Boricua1: Puñeta!! bro, did you see that chair fly right by my head!!
Boricua2: Nah, you've been watching too much Harry Potthead.