The propagation of light in a single-mode micron-size waveguide made of semiconducting excitonic material has been studied both analytically and numerically. The light pulses, spectrally centered in the vicinity of the 1s Wannier exciton resonance, interact with the medium nonlinearly. This optical cubic nonlinearity is caused by the repulsive exciton-exciton interactions in the semiconductor. We demonstrate that a very strong, unconventional modulational instability takes place, which has not been reported before. After reducing the coupled ordinary differential equation for the medium polarization and Maxwell's equations for the light pulse to a single nonlinear Schrodinger equation, we are also able to explore the formation of solitary waves both inside and outside the polaritonic gap.