Negative peak detector, capacitor
It might be easier to visualize if you turn the schematic upside down, so that components with more negative voltage are lower down:-







simulate this circuit &ndash; Schematic created using CircuitLab

Now the reason for the capacitor's orientation is obvious, and you can see that it will charge 'up' (down?) to a negative voltage (relative to Ground). 

When V1 initially goes negative the diode will conduct because the Cathode is more negative than the Anode. This will cause the capacitor to charge through R1 and D1 until the diode stops conducting at about 0.5V, at which point the capacitor will have about 0.5V less voltage on it than the supply.

Note that with the voltmeter connected as shown it will read positive voltage because its positive terminal is connected to Ground.