Derby defeats always hurt but this one, coming at this stage of the season and with so much at stake, hurt that little bit more.

A first loss to rivals Luton of any sort in 11 matches was not what the doctor ordered at this critical juncture of the season and now leaves the Hornets with more work to do than they anticipated in the final four games. Fortunately other rivals dropped points so automatic promotion is still thankfully in their own hands, but the denouement now threatens to be a bit more nervy than anyone would have liked after this hugely disappointing and unexpected result.

It was just one of those days at the office that is so hard to explain and one you know isn't going to go your way when the usually unflappable and calmness personified Kiko Femenía is sent off for two yellow cards. A derby game does strange things to people. This was definitely not the energetic and hungry side the fans have grown to love since February. They looked like they had, for one dramatic second, managed to get out of here with a point following a flat performance when Andre Gray thought he had scored the equaliser, but it was just the way things went for the Hornets that Gray was denied such a crucial goal on his return to Kenilworth Road.

Luton, in truth, deserved their victory, their first here against the Hornets since 1993, but what will disappoint the visitors is that they handed it to their old adversaries thanks to a 78th-minute penalty that fell squarely in the soft category. James Collins came off the bench to put it away with his first touch and that was the end of that. Teams are entitled to an off day, especially after 11 wins in 13 games, but the timing and location was just really lousy.

The first half was not what we had been used to under Xisco Muñoz. Far from it. The visitors had scored in the first half in each of their previous eight games, including every time before the 32nd minute, but they didn't muster a single attempt on target here and only had two efforts on goal in total. It was very unlike the all-action team who have played on the front foot since the transformational switch to 4-3-3.

Luton were the more direct, progressive and energetic of the two sides and they were perfectly entitled to wonder how they weren't at least a goal up at the break. They fashioned 12 attempts on goal, although none on target, and won the corner count 4-0. They seemed determined to put a spanner in the works of the Hornets' automatic promotion and gave it everything they had – and a bit more.

You knew they meant business when Jordan Clark thundered into a tackle on four minutes that left Philip Zinckernagel winded and requiring treatment. It was hard work for the Hornets thereafter.

Luton felt they had two penalty shouts for challenges in the box by Carlos Sánchez; Sonny Bradley was just wide with one from a free-kick from Kiernan Dewsbury-Hall; he then screwed one wide; Daniel Bachmann had to dash out to smother Luke Berry and then the impressive Dewsbury-Hall had Bachmann scrambling across his goal as he tried to steer one in the far corner. The Hatter gave the Hornets a real searching examination in the first half and the visitors, if they didn't know already, certainly knew they were in a game.

Xisco Muñoz needed to change something and he took swift action at the break, sending on Isaac Success for Zinckernagel and giving the team a focal point in attack. Success made his presence felt immediately, smashing into Matty Pearson with a challenge that gave the defender the hump. This was more like it and exactly the sort of thing you expected in a derby. By the 52nd minute, Ken Sema had got into two more advanced positions than he had done in the whole of the first half.

Just after the hour, Tom Cleverley came onto to add some more energy and some drive from midfield. It was his first appearance since the beginning of March against Wycombe. And it was the vice captain who was on the end of the first chance of the second half, clearly making sure he had read the set-play briefs before he came on and combining with Sema and Hughes to fire one past the left-hand post after a neat routine. It still wasn't anything like the attacking verve of the last two months, but it was better and enterprising.

The Hornets peaked there, though, and Luton came again. Elijah Adebayo induced a foul from Bachmann to win a penalty after an under-hit back pass and Collins did the rest from the spot. Femenía then was sent off for two yellow cards, Gray had an effort ruled out for offside and Luton had the win that was celebrated wildly, and perhaps quite rightly, by Nathan Jones at full-time.

It was a hammer blow for the Hornets, but thankfully not a fatal one. Norwich away on Tuesday would be the perfect place to place to put this right. The time is now.